Exports contracted for the seventh consecutive month, with shipments in June falling by 15.82% to $22.3 billion due to the softening of crude oil prices besides weak demand in major overseas markets, a relatively stronger rupee and domestic bottlenecks.
Meanwhile, imports in June shrank 13.4% to $33.1 billion reflecting the underlying weakness in the manufacturing sector and tepid domestic demand. This resulted in a trade deficit of $10.8 billion. For the fourth consecutive month to June, the deficit was above $10 billion mark.
Thanks to the fall in crude oil prices, oil imports during the month under review were $8.7 billion, 35% lower than $13.3 billion in the corresponding period last year. However, non-oil imports (including capital goods) during June were 1.85% lower than the corresponding month a year ago, at $24.4 billion.
Expressing his disappointment over the continuous decline in exports, S C Ralhan, president, Federation of Indian Export Organisations, said though soft external demand was the main reason for the weak export numbers, the slowdown in manufacturing (manufacturing growth in May was a moderate 2.2%), strengthening of Indian rupee against the US dollar at a time when other currencies have weakened substantially, high cost of credit and increasing logistics cost too contributed to the fall in no less measure.
He said while external conditions may improve from September, the domestic constraints have to be addressed to bring exports back on track. Most of the sectors which exhibited a decline in the month of May, have shown even deeper negative trend in June. This was also because of 15-40% growth in June last year, by sectors such as petroleum products, engineering, leather and marine products, Ralhan said, adding that the base effect will turn out to be favourable from September, 2015.