Dip in imports, exports rise narrow trade gap

Trade deficit narrows to $10.1 bn y-o-y

Snapping the double-digit growth rate for the second time, merchandise exports rose 3.5 per cent in December 2013 to $26.3 billion from $25.4 billion in the year-ago period, mainly on account of a fall in exports of petroleum products.

Exports had been growing in double-digits since July 2013. However, in November 2013, growth in shipments came down to 5.9 per cent.

According to Director-General Foreign Trade Anup K Pujari, export growth moderated due to petroleum product exports, which came down sharply by 16 per cent. Petroleum exports constitute a little over 20 per cent of India’s total export basket.

Imports dropped 15.25 per cent to $36.5 billion in December 2013, compared to $43 billion in December 2012. Thus, the  trade deficit last month narrowed to $10.1 billion, compared to $17.2 billion in the year-ago period, according to data released by the commerce ministry on Friday.

The decline in imports was led by gold and silver, which dropped 68.8 per cent to $1.8billion in December 2013, on account of a series of restrictive measures taken by the government to tame gold import in an effort to control the current account deficit (CAD). In the previous month, import of gold and silver stood at $1.05 billion.

According to a note by YES Bank, the CAD for FY14 will be lower than expected, in the range of $35-40 billion.

Total exports during April-December 2013 stood at $230 billion, up six per cent over the $217 billion in the corresponding year-ago period. Total imports during the first nine months of the current financial year registered a decline of 6.6 per cent to $340.4 billion, compared to $364 billion in the corresponding period last year.

“We are well on the track of the exports target ($325 billion in FY14),” Commerce Secretary S R Rao told reporters here on Friday.

Import of crude oil in December 2013 reached $13.89 billion, up 1.1 per cent from $13.75 billion in the year-ago period. Total crude oil imports stood at $124.95 billion, which was 2.6 per cent higher than the oil imports of $121.83 billion in the corresponding period in the previous year.

According to M Rafeeque Ahmed, president of Federation of Indian Export Organisations, the shutdown of Reliance’s refinery for maintenance has led to the decline in growth of exports for December 2013 and the modest growth in petroleum exports in April-December 2013 was owing to the decline in crude oil prices, which came down to an average of $108.64 a barrel in 2013 against $111.65 a barrel in 2012.

In December 2013, non-oil imports reached $22.58 billion, compared to $29.29 billion in the same month in the previous year, registering a fall of 23 per cent. During the April-December 2013 period also, non-oil imports dropped by 11.1 per cent at $215.42 billion, compared to $242.41 billion in the year-ago period.