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Trade deficit widens on slowing exports
The rise in imports was mostly on purchase of oil and electronics goods; non-oil imports grew only by 0.03%
New Delhi: India’s trade deficit widened to a year’s high at $12.2 billion in July as export growth slowed to single digits after two months of double-digit growth and imports continued to expand for the second month in a row.
In July, merchandise exports rose 7.33% to $27.7 billion while merchandise imports increased 4.25% to $39.9 billion.
Data released by the Reserve Bank of India showed during the first quarter (April-June) of the current fiscal, net services exports were at $17.2 billion, growing at 1.8% over the same period a year ago.
The rise in imports was mostly due to purchase of oil (12.75%) and electronics goods (17.69%) during the month. Non-oil imports, which is an indication of the health of domestic demand, grew only by 0.03% to $25.6 billion in July.
Among the items in merchandise exports, sectors such as drugs and pharmaceuticals grew at 10.78% to $13.1 billion in July, while engineering goods rose 23.89% to $5.8 billion. However, among the major sectors, gems and jewellery exports contracted 17.42% to $2.9 billion during the month.
M. Rafeeque Ahmed, president of Federation of Indian Export Organisations (FIEO), said the merchandise exports growth is below expectation. “While engineering, chemicals and pharma, apparel, leather, marine continued to post better results in July, as was in the earlier months, gems and jewellery, electronics, cotton textiles continue to be cause of concern as their negative growth is pulling down overall exports growth,” he added.
Ahmed said the global trade scenario is improving with positive development in the European Union, the US and emerging economies, and in the coming months exports should reflect these developments.
The World Trade Organization (WTO) expects global trade to grow by a modest 4.7% in 2014, and at a slightly faster rate of 5.3% in 2015.
“Although the 2014 forecast of 4.7% is more than double the 2.1% increase of last year, it remains below the 20-year average of 5.3%. For the past two years, growth has averaged only 2.2%,” it added.
The commerce department is expected to release a new foreign trade policy later this month to boost manufacturing and exports. The department is also working with the finance ministry to ease some of the tax restrictions put on the trade enclaves.
On Thursday, in a separate release, the commerce department said it has initiated an exercise for standardization of procedures, harmonization of rules, formats and fees, and is undertaking a review of the issues relating to human resource management (both SEZ—special economic zones—and customs), vigilance mechanism, grievance redressal and its monitoring in all SEZs. “Department of commerce is also making preparations for allowing online filing of applications for various purposes by SEZ developers, and this facility would be launched next month,” it said.
To facilitate ease of doing business of SEZs, the ministry has also prescribed time limits for disposal of activities related to SEZ developers and units by offices of development commissioners. While the time limit for examination of proposals for setting up SEZs, including site inspection of land and sending it to the commerce department is 15 days, Form-I for central sales tax compensation needs to be issued within five days.
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First Published:14 Aug 2014, 08:01 PM IST
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