India’s Trade Deficit Widens Even As Exports Bounce Back
India’s trade deficit in October widened from a five-month low in September after crude oil imports coupled with a depreciating rupee weighed on the nation’s trade books.
The gap between exports and imports stood at $17.13 billion, compared with $14.61 billion in the same month last year, according to a release from the Ministry of Commerce. The trade gap had hit a five-year high of $17.4 billion in August. ICRA Ltd.’s Principal Economist Aditi Nayar said that seasonal trends drove an uptick in the trade deficit.
India’s imports rose 17.6 percent to $44.11 billion in October from $37.50 billion in the year-ago period. Value of oil imports rose 52.64 percent year-on-year to $14.21 billion. Brent crude prices increased 39.66 percent in October from the same period last year.
The softening of crude oil prices in the ongoing month has eased concerns regarding the size of India’s current account deficit.Aditi Nayar, Principal Economist, ICRA Ltd.
Electronic goods, too, contributed to the rise in imports. The cumulative value of imports for the April-October period increased 16.37 percent over last year to $302.47 billion.
- Gold imports fell 42.9 percent to $1.68 billion despite the festive season.
- Electronic goods imports increased 31.94 percent to $5.2 billion.
- Iron and steel imports rose 32.2 percent to $1.47 billion.
- Machinery imports rose 12.4 percent to $2.97 billion.
- Coal and coke imports rose 12.4 percent to $2.26 billion.
Exports rose 17.86 percent to $26.98 billion, with increased shipments of petroleum products, electronic goods and organic and inorganic chemicals.
An increase in exports of textiles, yarn and garments, according to Nayar, may reflect a favourable base effect related to relatively muted shipments in October 2017, apart from the impact of a weaker rupee.
- Exports of petroleum products rose 49.4 percent to $4.5 billion.
- Exports of readymade garments snapped decline to rise 36 percent to $1.13 billion.
- Organic and inorganic chemical exports grew 34 percent to $1.85 billion.
- Gems and jewellery exports jumped 5.5 percent to $3.49 billion.
- Engineering goods exports increased 8.9 percent to $6.4 billion.