After rising in the double digits year-over-year for four consecutive months, India’s merchandise exports expanded by a modest 5.86 percent in November, but a steep decline in imports helped significantly narrow the country’s overall trade imbalance with the rest of the world.
“Three product categories — petroleum goods, gems and jewellery, and pharmaceuticals — have pulled down our exports,” Commerce Secretary S.R. Rao said in New Delhi, releasing the latest provisional trade data.
Exports in November were valued at $24.6 billion, up from $23.25 billion a year earlier. Imports for the month plunged 16.3 percent to $33.83 billion, the lowest level since March 2011, with the monthly trade gap estimated at $9.2 billion, which was 46.43 percent lower than in the same month last year.
From April to November, the first eight months of fiscal year 2013-14, total exports climbed 6.27 percent from a year earlier to $204 billion. Imports in the eight-month period amounted to $303.89 billion, down 5.39 percent from $321.2 billion, pulling cumulative trade deficit to $99.9 billion from $129.23 billion a year earlier.
Rafeeque Ahmed, president of the Federation of Indian Export Organizations, said operational delays and congestion at the Nhava Sheva Port (Jawaharlal Nehru) terminals, which handle more than half of India’s total containerized cargo, in the past two months partly contributed to the lower export growth in November. “Terminals had to suspend receiving export containers due to lack of space as a sequel of labor strikes affecting exports in November,” Ahmed said. “These exports will be added in the current month’s volume.”
FIEO expects the country’s exports to reach the target of $325 billion set for fiscal year 2013-14, which ends March 31, 2014, with the annual trade gap likely to be anywhere from $140 billion to $150 billion, compared with $190 billion in 2012-13.
“While export growth slowed in November partly on the back of a negative base effect, going forward, we expect a weak (Indian) rupee and recovery in global demand to keep export growth buoyant,” said CRISIL, a unit of credit evaluator Standard & Poor’s, in a statement. “A revival in household demand would be supported by higher farm incomes due to a good monsoon. As a result, despite robust export growth, trade deficit may not fall further in the remaining months of fiscal year.”
Most industry observers attribute the ongoing deceleration in imports to a sharp fall in gold imports after New Delhi tightened measures to curb the inflow of the precious metal — the largest non-essential item by value in India’s inbound trade — into the country in an effort to reign in the burgeoning trade imbalance. According to the latest statistics, gold and silver imports tumbled 80.49 percent year-over-year in November to $1.05 billion.
"The continued rise in exports for the fifth month in a row is noteworthy. The first eight months of this fiscal (year) have witnessed a nearly 23 percent decline in the cumulative trade deficit, which will considerably ease the pressure on the current account deficit and make the rupee more stable," said Naina Lal Kidwai, president of the Federation of Indian Chambers of Commerce and Industry.
“The Indian exporters are adapting to the changing world economic order and are making desired strategies to increase exports not just in goods but also in services. Hope that the positive momentum will continue,” the Confederation of Indian Industry said in a written statement.
India’s overall outbound trade dipped 1.8 percent year-over-year to $300.6 billion in fiscal year 2012-13, which ended March 31, 2013, prompting the Commerce Department to scale back the export target for 2013-14 from an original estimate of $500 billion to $325 billion.