India’s merchandise exports fell for the eleventh consecutive month in October. Exports contracted 17.53 per cent to $21.35 billion in October, against $25.89 billion in October 2014, according to data released by the commerce ministry on Monday. As against this, during the 2008-09 global financial meltdown the decline was for nine months in a row.
This has prompted the government to announce export-incentive measures for the second time in a fortnight. After coming out with a revamped Merchandise Exports from India Scheme last month, the finance ministry on Monday raised the duty drawback rates — reimbursement of duties paid on imports used for exports — particularly for engineering products.
While exports of high-value petroleum products declined 55 per cent in October, engineering products by 6.3 per cent, and gems & jewellery by 7.56 per cent, only 21 items posted contraction in outbound shipments against 24 in September. Also, the decline in exports decelerated from the 20 per cent fall in August and September each.
As dollar receipts dwindled, what was a bit comfortable for India was that imports, too, dropped by 21.15 per cent to $31.12 billion in October against the year-ago period, when it was $39.46 billion.
Imports of oil, a fifth of total inbound shipments, were down 42 per cent at $76.8 billion in October against $44.5 billion in the year-ago period. Non-oil imports fell 9.9 per cent at $24.3 billion against $26.9 billion. This is often taken as a proxy to domestic demand in the economy.
Non-oil non-gold imports are now considered a true indicator of such demand. In line with overarching trends, gold imports, too, fell 59.55 per cent in October to $1.70 billion, down from $4.20 billion in October 2014. This was despite the festival of Diwali falling in November this year against October last year. As such, non-oil non-gold imports declined 8.5 per cent at $22.6 billion in October against 5.2 per cent contraction at $23.7 billion in September. This also showed economic recovery will take time.
For the first eight months of the current financial year, exports declined 17.6 per cent at $154.29 billion. With only four months to go for this financial year to be over, touching the $300-mark would a remote possibility, feared the Federation of Indian Export Organisations president S C Ralhan. Even at $300 billion, exports would contract three per cent in 2015-16 compared to $310 billion in 2014-15.
For the April-October period, India’s cumulative imports were at $23.20 billion. This was a 15.17 per cent drop from $27.35 billion, which was the cumulative figure for the same period last year.
As a result, trade deficit narrowed to $77.76 billion, cumulatively, for months leading up to October. The corresponding figure for the previous year was $86.26 billion.