India's goods exports shrink, gold imports nearly double (Roundup)

In a worrying start to this fiscal, India's merchandise exports declined sharply by 14 percent in April and stood at $22.05 billion due mainly to the overall conditions in the global market, while gold imports shot up by 85 percent.

The exports contracted from $25.63 billion during April 2014.

According to data on exports and imports released by the ministry of commerce and industry on Friday, the trade deficit for April this year stood at $11 billion against $10.08 billion during the like month of the previous year.

The trade deficit, in fact, widened despite a major 42.65-percent drop in oil imports during April 2015 and was valued at $7.44 billion against $12.98 billion in the corresponding month of the previous year.

Non-oil imports, including gold, were estimated at $25.60 billion, which was 12.58 percent higher than the $22.74 billion in April 2014. Imports of gold nearly doubled and were over 85 percent higher at $19.65 billion, against $10.596 billion.

The overall imports during April were down by 7.48 percent at $33.04 billion from $35.72 billion.

Commodity-wise, high export growth was witnessed in tobacco (24.28 percent), spices (19.60 percent), ceramic products (15.67 percent), carpets (14.17 percent), handicrafts (13.46 percent), cashew (10.71 percent), drug and pharmaceutical (9.73 percent) and cereal preparations (8.08 percent).

Segment-wise, high import growth was reported in fertilisers (70.70 percent), transport equipment (69.44 percent), pulses (42.45 percent), electronic goods (30.01 percent), artificial resins and plastic materials (19.35 percent), fruits and vegetables (17.03 percent), iron and steel (16.01 percent) and electronic and non-electronic machinery (10.11 percent).

Another set of data independently released by the Reserve Bank of India (RBI) showed that services export for March was lower by 1.88 percent and stood at $14.04 billion from $14.31 billion earned during the corresponding month of last year.

However, services imports during March fell by 7.42 percent and stood at $7.86 billion from $8.49 billion in the like month of 2014.

The Federation of Indian Export Organisations (FIEO) said that the sharp decline in petroleum exports coupled-with negative growth in some key export sectors was the main reason behind the export decline.

Petroleum exports in the month under review declined by 46.5 percent. The sector used to contribute about 20 percent of the country's total exports.

"Negative growth in exports is continuing since December, 2014 though the decline has come down from March. The prime reason continues to be softening of crude, metal and commodity prices," S.C. Ralhan, president, FIEO was quoted in a statement.

"Decline in exports of rice, marine products, meat, dairy and poultry products, leather products are of equal consequences as these sectors have shown great promise in the past.

As per Ralhan added that exports to countries dependent on oil, metal and commodities may have taken a hit as they reduced their appetite for imports with tighter capital control.

Ralhan added that the interest subvention scheme may be re-introduced immediately and liquidity crunch of the exporters may be addressed with timely release of the exports benefits.