You are here: Home » Economy & Policy » News
Business Standard

Trade deficit at all-time high of $23 bn in Sept on festive season imports

Export growth halves to 23%, imports soar by 85%; repercussions likely on current account balance which is set to hit a deficit in Q2 against surplus in first quarter of current fiscal

Topics
trade deficit | festive season | Indian Economy

Indivjal Dhasmana  |  New Delhi 

free trade agreements

The jumped to a record high of $22.59 billion in September against $13.3 billion in the previous month due to huge imports of goods ahead of the festival season and the hardening of commodity prices.

This may have an impact on the current account balance, which is set to give way to a deficit at least in the second quarter against a surplus in the first quarter this fiscal year.

The rose because merchandise exports growth moderated to 22.6 per cent in September against 45.6 per cent in August and goods imports expanded by 84.8 per cent against 51.7 per cent over this period last year.

Aditi Nayar, chief economist at ICRA, said: “The sharp rise in the merchandise in September reflects an element of inventory stocking ahead of the as well as advancement of crude oil purchases in the light of the looming hardening of prices.” Exports stood at $33.8 billion in September against $27.5 billion a year ago as high-value products — petroleum, engineering goods, electronic goods, and gems and jewellery — rose in double digits.

Outbound shipments of petroleum were up 48 per cent, followed by engineering goods at 37 per cent, electronic goods at 26.3 per cent, and gems & jewellery at 19.7 per cent.

Labour-intensive exports such as leather and leather products and handicrafts expanded in single digits.

chart
Exports were also up 29.9 per cent against September 2019.

Federation of Indian Export Organisations President A Sakhtivel highlighted the issue of the shortage of containers and freight hikes. He asked for a regulatory authority to seek justification for freight hikes and the imposition of various charges by shipping lines.

Imports, on the other hand, stood at $56.4 billion in September against $30.52 billion a year ago.

Increase in global rates led to imports of petroleum trebling to $17.4 billion in September over $5.8 billion in the same month of 2020. Imports of gold went up to $5.1 billion compared to $600 million a year ago.

Coal shortage also led to its and related imports rising to $2.2 billion against 1.2 billion a year ago.

Sakthivel emphasised the need to analyse imports.

Non-oil non-gold imports recorded a growth rate of 40.4 per cent in Sep­tember compared to 37.3 per cent in August. These inbound shipments are taken as a barometer for industrial demand. This means that the index of industrial production (IIP) may continue to show an upbeat trend in September though the high base may take away some of its impact.

The IIP grew by 11.9 per cent in August compared to 11.5 per cent in July.

Exports grew 57.5 per cent at $197.9 billion in the first six months this fiscal year, which means almost half the target of $400 billion for the entire year has been achieved.


Dear Reader,


Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

First Published: Thu, October 14 2021. 19:47 IST
RECOMMENDED FOR YOU
.