Rising global petroleum prices may have increased worries of retail customers, but it helped oil exports rise 36.4 per cent for August. Besides, engineering goods rose 19.53 per cent in the month, pushing up the overall outbound shipment that grew for the 12 straight months after contracting for more than a year.
Import growth also accelerated in August to $35.46 billion, up 21 per cent as compared to the 15.42 per cent rise in July. This pushed up the trade deficit in August to $11.64 billion from $7.7 billion in August 2016. This may push up current account deficit further.
According to the commerce department, India exported $23.81 billion worth of goods in August against $21.59 billion in the same month last year.
The first set of trade data released after Suresh Prabhu took charge as commerce and industry minister showed that export growth gathered pace in August after decelerating for four months since March, when it hit a high of 27 per cent. Exports grew 8 per cent in May and 4.39 per cent in June.
The growth came even as exporters complained over the refund mechanism under the GST, saying it was affecting outbound shipments.
Exporters have to pay integrated GST on import of goods and then claim refunds based on their scrips under the new indirect tax system.
Import of gold surged around 69 per cent and that of silver by over 100 per cent. Non-oil, non-gold imports rose over 20 per cent in August, but it is still not clear whether it would mean robust industrial recovery. The index of industrial production (IIP) remained more or less flat in July after contraction in June. The ray of hope is that project goods increased 26.5 per cent in August.
“The rebound in growth of non-oil merchandise exports in August was dwarfed by the 20.7 per cent surge in non-oil non-gold imports, bloating the trade deficit by $4 billion relative to August 2016,” said Aditi Nayar, principal economist at ICRA.
Imports recorded a fairly broad-based upsurge in August. Besides, inbound shipment of precious metals and fuel such as crude oil and coal, electronic goods, iron and steel, and machinery increased significantly.
Cumulatively, imports were worth $181.71 billion in the first five months of the current fiscal year, much more than $143.50 billion in the same period of the previous year.
Only four sectors contracted among the 30 most important export sectors. This was down from July, when 11 sectors were in decline.Among major foreign exchange earners were petroleum and engineering exports.
“Engineering exports have been growing at a respectable pace and the growth is due to a pick-up in base metals. But the rupee value is a cause for concern,” said T S Bhasin, chairman of the Engineering Exports Promotion Council of India.
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Gems and jewellery exports declined over 25 per cent in August, a weaker performance than the 22 per cent contraction in July.
Cumulative exports in April-August are $118.57 billion, up 8.57 per cent from the $109.21 billion in the same period a year ago.