Exports contract 1.1% on GST concerns, trade deficit widens to near 3-year high in October
NEW DELHI: Exports declined in October after a six-month high expansion in September as the uncertainty related to goods and services tax (GST) took its toll on shipments, causing the trade deficit to balloon to a near three-year high as imports expanded.
Exports contracted 1.1% in October from a year ago while imports rose 7.6%, data released by the government showed, yielding a trade deficit of $14 billion in October, highest since November 2014.
Trade deficit was $11.1 billion in October last year and $9 billion in September this year.
In absolute terms, India exported $23.1 billion goods in October compared with $23.4 billion a year ago.
Imports added up to $37.1 billion in October against $34.5 billion same month last year.
“Although the merchandise trade deficit flared up in October 2017, it may not be a source of alarm, as the average trade deficit for September-October 2017 is in line with the trend in the months of July 2017 and August 2017,” said Aditi Nayar, principal economist, ICRA.
“The contraction in merchandise exports in October partly reflects an unfavourable base effect, as well as upfronting of shipments to the previous month,” she added.
India’s exports had risen 25.67% to $28.61 billion in September, logging its highest growth in the last six months.
Engineering exports were up 11.8% to $5.9 billion while chemicals and petroleum exports rose 22.3% and 14.7%. Gems and jewellery exports were down 24.5% in October while pharma shipments declined 8.75%. Gold imports fell 16% to $2.95 billion.
Exporters’ body FIEO said the fall was expected as exporters were facing liquidity problem having to pay GST for four months in a row without getting any refund.
April-October exports were up 9.62% at $170.2 billion while imports were higher 22.2% at $256.4 billion, yielding a trade deficit of $86.1billion.