Exports contract for 6th straight month; trade deficit widens

Imports also fell for the eighth consecutive months, down 0.75 per cent to $41.14 billion in January, widening the trade deficit to a seven-month high of $15.17 billion.

The country's exports dropped 1.66 per cent to $25.97 billion in January, the sixth straight month of contraction, on account of a significant fall in shipments of petroleum, plastic, carpet, gems and jewellery, and leather products.

Imports also fell for the eighth consecutive months, down 0.75 per cent to $41.14 billion in January, widening the trade deficit to a seven-month high of $15.17 billion, according to the government data released on Friday.

Gold imports shrunk by about 9 per cent to $1.58 billion during the month under review.

Last time, it was in June 2019 when the trade deficit aggregated at $15.28 billion.

Of the 30 key sectors, as many as 18 segments showed negative growth in exports during the month.

Shipments of petroleum products, plastic, carpet, gems and jewellery, and leather products contracted by 7.42 per cent, 10.62 per cent, 5.19 per cent, 6.89 per cent, and 7.57 4 per cent, respectively, in January.

The country's outbound shipments have remained subdued so far this year. It may have a bearing on the overall economic growth, which is pegged at 5 per cent for the current financial year.

Industrial output declined by 0.3 per cent in December 2019 due to poor performance mainly by manufacturing.

In January, while oil imports grew 15.27 per cent to $12.97 billion, non-oil imports fell by 6.72 per cent to $28.17 billion.

Cumulatively, during the April 2019-January 2020 period, exports were down 1.93 per cent to $265.26 billion, while imports contracted by 8.12 per cent to $398.53 billion.

Trade deficit during the period narrowed to $133.27 billion as against $163.27 billion in April-January 2018-19.

Meanwhile, an RBI release showed that services export for December 2019 stood at about $20 billion while imports were at $12.56 billion.

Commenting on the figures, Apparel Export Promotion Council of India (AEPC) chairman A Sakthivel said the textiles sector needs immediate help from the government to further push the exports.

"Proper implementation of Rebate of State and Central Taxes and Levies Scheme (RoSCTL) and Merchandise Export from India Scheme are keys to push apparel exports as the order books are not encouraging currently," he said.

Federation of Indian Export Organisations (FIEO) president Sharad Kumar Saraf said global and domestic factors have again pull down the monthly exports.

"Besides, protectionism and liquidity concerns coupled with sudden spread of novel coronavirus in the world's second-largest economy, China has further worsened the global sentiment and exporters are delaying their shipments," he said.

Photograph: Aly Song/Reuters