Exports bounced back in October to high double-digit figures after a mild contraction in September, as engineering goods, pharmaceutical and chemical shipments picked up pace. However, this didn't prevent trade deficit from widening, as crude oil bill continued to shoot up.
Outbound trade rose by 17.86 per cent in October to $26.98 billion. In September, exports had declined for the first time this financial year, albeit by a moderate 2.15 per cent. Despite suggesting that this was due to global trade headwinds, the figure had raised eyebrows among policymakers since the fall had come even as the rupee depreciated against the dollar.
However, the latest rise failed to stop the widening trade deficit, which in October rose to $17.13 billion, compared to $13.98 billion in September, as the pace of import growth picked up again.
India’s current account deficit (CAD) is expected to triple to a substantial $19-21 billion in Q2 of FY19, or about 3 per cent of the GDP, from the modest $7 billion in Q2 last fiscal year, according to Aditi Nayar, Principal Economist at rating agency, ICRA.
“The softening of crude oil prices in the ongoing month has eased concerns regarding the size of India’s CAD. Assuming that the price of the Indian basket of crude oil averages $73/barrel in FY19, the CAD is forecast by ICRA at 2.7 per cent of the GDP,” she added.
The second largest component of the import bill — gold — saw a sharp drop in inbound shipments as imports fell by nearly 43 per cent to $1.68 billion. The gold industry continues to see volatility as imports had risen in July after remaining in negative territory for six consecutive months.
The growth of non-oil non-gold merchandise imports also remained in double digits in October, rising by 11.77 per cent to $28.21 billion as inputs, such as machinery, coal, chemicals, fertilizers, iron and steel, non-ferrous metals, and electronic goods, continued to pour in.
Among other major sectors, engineering goods exports rose by 9 per cent to ship out merchandise worth $6.37 billion, after a contraction of 4.12 per cent in September. On the other hand, pharmaceutical exports picked up steam, growing by 12.83 per cent to $1.51 billion, up from the 3.83 per cent rise in the previous month.
However, signs of built-up stress reducing in the labour-intensive sector of apparels were visible in October when it zoomed upwards by 36.26 per cent. Export of readymade garments rose to $1.13 billion after witnessing a downturn since October 2017.
Source :- Dailyshippingtimes.com