India's trade deficit narrowed to a five-month low of $10.9 billion in August on the back of improving exports, which showed a double-digit growth for the second consecutive month, and a marginal decline in imports led by a sharp fall in gold imports.
Policymakers worried over a high current account deficit sought to derive optimism from the official data released on Tuesday, but analysts warned of the unabated rise in crude oil imports.
Exports grew 12.97% to $26.13 billion in August- the highest growth in the last two years – while imports declined 0.68 % to $ 37.05 billion.
Exports stood at $23.13 billion in the corresponding month last year, while imports were $37.3 billion leaving the trade deficit at $14.17 billion.
Commerce and industry minister Anand Sharma said the the trade data, especially the crash in gold imports, signified an “effective turnaround,” but added that rising crude import bill was a matter of concern.
The government has been talking about measures to curb the consumption of petroleum products, besides sticking on to the path of deregulation of prices, to moderate the fiscal impact of the oil import bill.
Gold imports fell 78% to $0.65 billion in August from $2.97 billion in July.
In volume terms, imports of the yellow metal crashed 95% in August over the previous month.
“Gold imports are coming down and we expect that trend to continue though it will not have an impact on the jewellery sector. We are in a firm positive terrain with exports growing at double digits. Our imports are also down and we are closing the big gap in our trade account. We have had a bumper harvest as monsoons have been good. There is an effective turnaround,’’ Sharma said.
India's annual petroleum import bill is more than $160 billion a year.
According to Ajay Sahai, director-general and CEO, Federation of Indian Export Organisations (FIEO), “India's export competitiveness has increased by 7-8% because of the depreciating rupee especially in traditional sectors which have benefitted the export performance in the last two months.”
Higher customs duties on gold, platinum and silver have helped curb their imports for investment purpose. Recently, India also imposed import taxes aggregating 36% on high-end flat screen (LCD/LED) plasma TV sets.
It is also planning impose such barriers on imports of several