Exports contract 0.3% to $21.51 billion in August

Imports dropped 14% to $29 billion; August trade deficit at $7.7 billion

Merchandise exports fell for the second consecutive month in August, going down by a marginal 0.30 per cent.

Exports fell to $21.51 billion in August, against $21.58 billion in the corresponding period last year, government data showed on Thursday. In the month of July, exports had contracted 6.84 per cent, to $21.68 billion.

Cumulative exports for the April-August period of FY17 stood at $108.51 billion, compared with $111.85 billion for the corresponding period in FY16. Imports also declined by 14.09 per cent to $29.19 billion in August, compared with the year-ago period, when it was $33.98 billion. Cumulative imports in the current financial year reached $143.18 billion, compared with $170.23 billion in the previous year.

Exports had contracted for 19 consecutive months till May this year, before rising marginally by 1.27 per cent in June. Compared to this, during the 2008-09 global financial meltdown, the decline was for nine months in a row.  In the last financial year (2015-16), total exports had stood at $261 billion. This was a 15.85 per cent decline from the over $310 billion worth of trade conducted by the country in the year before. While the government had targeted $300 billion of exports, the figure had to be revised downwards to $260-270 billion after merchandise trade remained negative throughout the last financial year.

The fall in exports had reached its lowest possible levels and would start growing soon, commerce ministry sources said.

Besides a global slowdown, the severe fall is attributed to global factors such as a decline in commodity prices and sluggishness in the Chinese economy, among others. Among major export items, outbound trade fell for 16 items, against 22 items in July.

Export of engineering goods made a comeback in the growth charts in August, rising 8.47 per cent after remaining depressed for months. It had fallen by 12.11 per cent in July.  Also, the fall in exports of drugs and pharmaceuticals, which had been mellowing in recent months, finally gave way to growth in August. It rose 0.67 per cent in August after a 0.07 per cent fall in the previous month.

On the other hand, petroleum products continued to fall by 14.08 per cent, albeit lower than the 21.78 per cent fall seen in July. Exports of major exchange earners like ready-made textile goods and gems and jewellery also rose by 3.72 and 7.58 per cent, respectively. While textiles had fallen by nearly six per cent in June, gems and jewellery had risen by 8.80 per cent.

“Non-oil exports recorded a small rise on a y-o-y basis in August 2016, led by items such as gems & jewellery, iron ore and engineering goods, although the sustainability of this trend remains to be seen.” Aditi Nayar, senior economist at ICRA said.

Reacting to the latest fall in export, President of Federation of Indian Exports Organization S C Ralhan said global trade outlook has improved but economic indicators from some advanced economies continue to be troubling.

Non-oil and non-gold imports, taken as a proxy for an indicator of industrial demand, continued to decline, albeit at a slower pace of 1.52 per cent, reaching $ 21.34 billion in August from $ 21.67 billion a year before. It had declined by 9.9 per cent in the previous month of July.

Gold imports continued to fall by a large margin for the seventh consecutive month, going down by 77.45 per cent to 1.11 billion as compared to the $ 4.95 billion worth of imports registered a year ago. Prices of the yellow metal had fallen by a large 63.65 per cent in the previous month of July.

The cumulative deficit in merchandise trade for the current financial year for the months leading up to August was $34.66 billion. This was more than 40 per cent lower than the figure for the corresponding period in FY16, which was $58.38 billion.

With net oil imports remaining relatively stable on a Year-on-Year basis, 80 per cent of this sizable fall can be attributed to lower gold imports, Nayar said.