Exports decline by 5 per cent in October

New Delhi: Growth rate of India’s exports entered the negative zone after a gap of six months, declining 5.04 per cent in October due to dip in shipments from major sectors such as engineering, pharma and gems and jewellery.

The trade deficit increased to $13.35 billion during the month as against $10.59 billion in October 2013. However, the trade gap is lower than the previous month when it was $14.24 billion.

It was in March that exports growth was in negative zone last time, when shipments had declined by 3.15 per cent. Exporters attributed the dip in exports in October to subdued demand in the US and European markets.

“Markets are not getting better. EU is going bad. The numbers are disappointing. The government is also not announcing any measures to help us,” Federation of Indian Export Organisations (FIEO) president Rafeeq Ahmed said.

Sharing similar views, CII National Committee on Exports and Imports chairman Sanjay Budhia too said that government should soon announce the new Foreign Trade Policy.

Top exporting sectors that registered negative growth in October include engineering (-9.18 per cent), pharma (-8.33 per cent), gems and jewellery (-2.25 per cent), cotton yarn/fabrics (-13.84 per cent) and petroleum products (-0.16 per cent).

Overall, imports grew by 3.62 per cent to $39.45 billion. During April-October period of the current fiscal, the country’s exports are up 4.72 per cent to $189.79 billion, while imports are up 1.86 per cent to $273.55 billion.

Trade deficit during the seven month period of 2014-15 stands at $83.75 billion as against $87.31 billion in the same period last fiscal. Oil imports in October dipped by 19.2 per cent to $12.36 billion. Non-oil imports, however, grew by 18.9 per cent to $27.08 billion.

Import sectors which recorded negative growth in October include transport equipment (-42.37 per cent) and precious and semi-precious stones (-27.11 per cent).

“With the surge in gold import which has been witnessed, it warranted a relook. Discussions are still going on between the RBI and the government of India. Once we know what are the discussions, further view will be taken,” RBI deputy governor S.S. Mundra said.

Worried over surge in gold imports, the government last week held a meeting to discuss ways to curb the rising inward shipment of the precious metal. Gold imports have touched 150 tonnes in October, as against 24 tonnes a year ago.

The Reserve Bank of India in August last year had imposed severe restrictions on gold imports and raised import duty to 10 per cent in order to check burgeoning current account deficit and sliding rupee.

The steps by the central government helped lower gold imports substantially but also increased instances of smuggling. In May, the previous government, eased certain rules and allowed private agencies to import gold under 80:20 scheme.

This facility was available to select banks only and other entities were barred from importing the metal. Under the 80:20 scheme, an importer has to ensure that at least one-fifth of every lot of imported gold is exclusively made available for the purpose of exports and the balance for domestic use.