Exports contracted 1.1 per cent in October year-on-year to $23.1 billion, the first fall in 14 months, as companies continued to struggle with issues related to the goods and services tax (GST).
The decline was led by sharp falls in major labour-intensive sectors such as leather & leather products, gems & jewellery, handicrafts, readymade garments, and carpets.
Exporters had earlier warned that the double-digit growth in outbound shipment between July and September despite roll-out of the GST might not present a true picture, as there were advance orders. Exports had soared by 25.7 per cent to $28.6 billion in September, its highest growth in six months, with expansion in shipment of chemicals, petroleum, and engineering products.
Ironically, exports fell in a month when the GST Council addressed most of the complaints of exporters, though one important measure,
e-wallets, would kick in only by the next financial year. Exporters grouse that the measures aren’t being implemented at the ground level.
The latest trade indicator released by the world trade outlook indicator of the World Trade Organization shows that the global trade growth will slow down in the fourth quarter of 2017 (October-December), compared to the previous three quarters. This may have also affected the country’s exports to an extent.
Imports in October rose 7.6 per cent, to $37.1 billion. Increasing crude oil prices led to the oil import bill rising 27.9 per cent in the month, from an 18.5 per cent rise in September. Despite total imports growing by the slowest pace this calendar year, the trade deficit increased to a 35-month high of $14 billion. It had stood at nearly $9 billion in September and $11.1 billion in the year-ago period.
Gold imports dipped 16 per cent to $2.9 billion last month. Aditi Nayar, principal economist with rating agency Icra, says: “Gold imports contracted in October despite onset of the festive and wedding season, given the build-up of substantial stocks over the past
As a result, non-oil/non-gold imports rose only 4.9 per cent, sharply lower than the 19.8 per cent in September and 20 per cent in August, indicating industrial production would suffer again in October.
A silver lining is that non-oil, non-gold imports were led by industrial inputs such as coal, organic and inorganic chemicals, machinery, non-ferrous metals, iron and steel, and electronic goods.
Cumulative exports during April-October (first seven months of this financial year) increased by 9.6 per cent to $170.3 billion, while imports grew 22.2 per cent to $256.4 billion, leaving a trade deficit of $86.1 billion.