Millennium Post

Trade deficit widens to record $20.96 bn in October as global slump hits exports

India’s October exports fell 1.63 per cent, year-on-year basis, with trade deficit widening to a record USD 21 billion, although the decline in overseas shipments was slight compared to the previous month. The rate of fall in exports – at USD 23.2 billion – was much lower than 11 per cent dip recorded in September. Exports in October of last year were valued at USD 23.63 billion.

Meanwhile, imports expanded by 7.37 per cent to USD 44.2 billion last month, highest in 18-months, leaving a trade deficit of USD 20.96 billion. Prior to this, the highest monthly import was USD 45.2 billion in May 2011.

For the first seven months (April-October) of the 2012-13 fiscal, exports have shrunk by 6.18 per cent to USD 166.92 billion. Imports during the period have dipped by 2.66 per cent to USD 277.13 billion. Trade deficit for the period thus stands at USD 110.2 billion.

‘In October, our exports performance has slightly improved,’ commerce secretary S R Rao told reporters here while releasing trade figures on Monday. However, he said that as the world trade is continuously contracting, it will have an impact on India’s trade.

On increasing import bill, Rao said it has increased due to jump in the gold and petroleum imports.

President of apex body of exporters FIEO Rafeeque Ahmed said ‘trade deficit is highest in recent times due to hike in oil imports’, which is up 30 per cent year-on-year.

Oil imports in October increased by 31.6 per cent year- on-year to USD 14.78 billion. However, non-oil imports declined by 1.73 per cent to USD 29.42 billion.

During April-October, oil imports grew by 10 per cent to USD 95.5 billion, from USD 86.8 billion in the corresponding period last year. However, non-oil imports during the period dipped by 8.22 per cent year-on-year to USD 181.56 billion. A higher trade deficit is cause of concern as it leads to increase in the country’s current account deficit.

Ahmed said meanwhile that the arrest of decline in exports in October points to recovery. He said that the decline in exports is primarily on account of slowdown in domestic manufacturing. Industrial production in September dipped by 0.4 per cent.

‘We would be seeing positive growth in exports from next month which may show double digit growth from January onwards or even earlier,’ Ahmed added.

Meanwhile, at the instance of Commerce and Trade Minister Anand Sharma, the Directorate General of Foreign Trade (DGFT) is reviewing the performance of different segments of the export sector.

‘The DGFT has done an extensive consultation with all the stakeholders. I think the review will be completed in the next two days,’ Rao said. He said after the analysis of the export sector, the Minister will take a call on whether there is any requirement of mid-term review of the Foreign Trade Policy (FTP) and if specific steps are need to boost exports.
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