Merchandise exports in January registered their biggest decline in the past three years, falling 11.2 per cent to $23.9 billion compared to $26.9 billion in the same month last year. This was also the biggest monthly decline this financial year.
It was mainly due to a decline in export of petroleum products, gems and jewellery and pharmaceuticals. The previous double-digit decline was in January 2012, by 12.1 per cent.
Total exports in April-January, the first 10 months of this financial year, were $265 billion, up 2.4 per cent over the $258.7 billion in the corresponding period of FY14, according to commerce ministry data.
Imports in January also fell, by 11.4 per cent to $32.2 billion as compared to $36.3 billion in the same month a year before. As a result, the trade deficit contracted to an 11-month low of $8.3 billion.
Exporters complained that the high cost of credit, non-availability of interest subvention and uncertainty over a new Foreign Trade Policy (FTP) were the main reasons for exports declining at such a rate.
“The government should come clear on when it wants to release the FTP. Exporters in tier-II and tier-III cities are facing an uncertain situation, as it is not official as to when the FTP will be announced and they are having problems in negotiating with international clients. The interest subvention should also be made available to all sectors and there is no clarity even on that,” said Ajay Sahai, director general, Federation of Indian Export Organisations.
Total imports during April-January reached $383.4 billion, up 2.2 per cent from $375.3 billion in the same period last year. The cumulative trade deficit widened to $118.4 billion compared to $116.5 billion during April-December of FY14.
“The contraction in non-oil merchandise export is a cause of concern, with the outlook for global demand remaining gloomy. Despite the onset of the wedding season, gold imports displayed a muted pick-up in January as compared to the previous month, with ample inventory post the sizable imports in September-November 2014,” said Aditi Nayar, senior economist, Icra.
Gold imports rose 8.1 per cent to $1.6 billion over $1.4 billion in the same month of FY14.
Oil imports in January contracted 37.5 per cent to $8.2 billion over the $13.2 billion in January last year.
Total oil import during April-January fell 7.9 per cent to $124.7 bn, compared to $135.4 bn in the same period a year before.
On the other hand, non-oil import in January grew 3.5 per cent to nearly $24 bn, from the $23.15 bn in January 2014. Cumulative non-oil import reached $258.7 bn during April-January, 7.8 per cent higher than the $239.9 bn during April-January of 2013-2014.
Commerce and industry minister Nirmala Sitharaman had earlier said a new FTP would be “happening soon”. The announcement of the FTP (2014-19) has been delayed as the ministries of commerce and finance are yet to agree on granting tax incentives for export promotion schemes.