India's trade deficit narrows, but flat exports a concern

NEW DELHI (Reuters) - India's trade deficit narrowed to $13.08 billion in December, the lowest in 10 months, on a fall in gold imports but exports remained flat, deepening concerns for Prime Minister Narendra Modi who wants to accelerate growth ahead of elections.

Modi, who had promised to boost exports by easing administrative rules and building infrastructure for manufacturing in India, faces criticism from businesses for not doing enough in the last five years.

India's annual goods exports have remained flat around $300 billion, compared to $314.4 billion in 2013/14, since Modi took charge in May, 2014.

"There is virtually no growth in merchandise exports," said Ravi Sehgal, head of the Engineering Export Promotion Council, adding that U.S.-China trade tensions and the global slowdown had started biting the shipments.

He said exports of engineering goods, estimated to contribute more than one fifth of total exports, had fallen by more than 3 per cent in December from the same period in the previous year.

"This is a matter of grave concern," Sehgal said.

In December, merchandise exports rose just 0.34 percent from a year earlier to $27.93 billion, while imports fell 2.44 percent to $41.01 billion, the trade ministry said in a statement on Tuesday.

Trade ministry officials had earlier said with the U.S.-China trade dispute, there was an opportunity to boost exports such as chemicals, drugs and electrical machinery to China.

(Reporting by Manoj Kumar; Editing by Ed Osmond)