India’s trade deficit widens to $12b

15 December, 2019 12:00 AM printer

MUMBAI: India’s trade deficit widened to 12.13 billion U.S. dollars in November from 11 billion in October, the commerce ministry said on Friday.

Exports contracted for the fourth straight month in November while the decline in imports eased on sequential basis. However, the deficit narrowed compared to last November at 17.58 billion U.S. dollars, reports Xinhua.

During the month under review, India’s exports were at 25.98 billion dollars while imports stood at 38.11 billion dollars.

“The substantial fall in imports of transport equipment is concerning, as is the decline in imports of various industrial inputs spanning items such as coal, iron and steel, non-ferrous metals, project goods, organic and inorganic chemicals, although this partly reflects a YoY decline in commodity prices,” said Aditi Nayar, Vice President and Principal Economist, ICRA, a credit rating agency.

In November, oil imports were 11.06 billion dollars, down 18.17 percent on year while gold imports were estimated at 2.94 billion dollars, up 6.59 percent on year.

However, in the current fiscal year so far from April to November, the trade deficit of India narrowed sharply to 54.06 billion dollars from 82.47 billion dollars in the corresponding period in the previous year.

India’s GDP growth has been at the slowest pace in six years to 4.5 percent in the July-September quarter. Economists expect the growth to slow down further to 4.3 percent in October-December period before a weak uptick in the subsequent January-March quarter at 4.7 percent.

Commenting on the data, EEPC India Chairman Ravi Sehgal said though engineering exports have put up a reasonably good show with 6.32 per cent growth in November 2019, the overall external trade environment remains challenging and subdued.

“We are working with the government to improve our competitiveness and hope that the issues raised by exporters, like the higher cost of basic raw material of steel, are addressed,” Sehgal said.

Imports too declined by 12.71 per cent to $38.11 billion in November, narrowing the trade deficit to $12.12 billion, according to government data released on Friday.

Gold imports increased by 6.59 per cent to $2.94 billion in the month.

Out of the 30 key sectors, as many as 17 segments showed contraction in exports during the month under review.

Shipments of petroleum products, gems and jewellery, fruits and vegetables, leather and leather products and ready-made garments of all textiles contracted by 13.12 per cent, 8.14 per cent, 15.10 per cent, 5.29 per cent and 6.52 per cent respectively.

In November, oil imports declined by 18.17 per cent to $11.06 billion, while non-oil imports contracted 10.26 per cent to $27.04 billion.

Cumulatively, during April-November 2019, exports were down 1.99 per cent to $211.93 billion while imports contracted by 8.91 per cent to $318.78 billion.