Registering the steepest decline in two and a half years, exports contracted by 11.19 per cent to USD 23.88 billion in January but trade deficit improved marginally because of cheaper oil imports.
The trade deficit in January narrowed to USD 8.32 billion from USD 9.45 billion in the same month last year. This is its lowest level in the past eleven months.
Declining prices of oil in the international market has impacted the country’s imports, which dipped by 11.39 per cent year-on-year to USD 32.2 billion.
The oil import bill declined by 37.46 per cent to USD 8.24 billion in January this year.
“The further decline in the size of the merchandise trade deficit is along expected lines, given the correction in crude oil prices,” ICRA said in a statement.
Gold imports in January this year grew by 8.13 per cent to USD 1.55 billion.
The drop in exports in January 2015 is the steepest since overseas shipments contracted by 14.8 per cent in July 2012.
Exports in January 2015 were in negative zone for the second consecutive month.
The decline in exports was mainly on account of poor demand from the European and Japanese markets.
All the major sectors including cotton yarn, chemicals, pharmaceuticals and gems and jewellery, tea, coffee, rice, tobacco and spices have recorded a negative growth in the month under review.
“Although the US is showing improvement, the poor economic situation in the EU and also Japan has led to the contraction in exports.
Government should take pro-active measures to boost exports and also come out with the foreign trade policy as early as possible,” FIEO President Rafeeq Ahmed said.
For April-January period of the current fiscal, exports grew by 2.44 per cent to USD 265.03 billion.
Imports were up by 2.17 per cent to USD 383.41 billion in the same period, leaving a trade deficit of USD 118.37 billion during the period.
Out of 30 exporting sectors being tracked by the commerce ministry, 21 have recorded negative growth in January.
Outbound shipments of cotton yarn, chemicals, pharmaceuticals and gems and jewellery contracted by 9.15 per cent, 10.52 per cent, 0.16 per cent and 3.73 per cent, respectively in January this year.
The other sectors which recorded negative growth include oil meals, cereal, marine products and meat and poultry.
Federation of Indian Export Organisations (FIEO) said the present export trend indicates that the export target of USD 340 billion for 2014-15 would not be achieved.
“In the given scenario, we would be happy, if we touch export of USD 325 billion in this fiscal,” Ahmed said.
“The uncertainty of policy front has also been a demotivating factor as exporters are unable to do their costing and take a call on future exports,” he added.
However cashew, oil seeds, fruits and vegetables, leather, engineering gods, man made yarn, ready made garments and carpet reported positive growth in January.
Further, decline in imports reflects slowdown in the manufacturing activities in the country.
Cotton, ores, chemicals, precious & semi-precious stones, machinery, project goods and medicinal products have recorded decline in imports.