New Delhi: India’s merchandise exports contracted for the second month in a row in March, while a decline in imports helped narrow the trade deficit and ease the pressure on the external sector and the rupee.
Exports in March fell 3.15% to $29.6 billion, while imports shrank 2.11% to $40.1 billion, leading to a trade deficit of $10.5 billion.
In 2013-14 (April-March), exports grew 3.98% to $312.3 billion, falling short of the $325 billion target. Imports during the fiscal year fell 8.11% to $450.9 billion, while trade deficit stood at $138.6 billion.
In March, oil imports rose 17.7% to $15.8 billion, while non-oil imports which signals the robustness of domestic demand contracted 11.8% to $27.5 billion.
In February, Indian exports had contracted 3.7% to $25.6 billion for the first time in eight months, dragged down by sectors such as petroleum, engineering and pharmaceuticals.
A pick-up in exports and curbs on gold imports helped India to rein in its current account deficit in the previous two quarters of 2013-14. India’s current account deficit narrowed to 0.9% of gross domestic product (GDP) in the quarter ended December, from 1.2% of GDP in the preceding quarter.A large trade deficit made the Indian economy vulnerable to external sector shocks and saw the Indian currency touching a record low of almost 69 per dollar in August.
The government is hoping to narrow the current account deficit to less than $40 billion this fiscal, or around 2% of GDP, mainly on the back of a sharp reduction in gold imports because of the high import duty of 10%. In 2012-13, the current account deficit had touched a record 4.8% of GDP.