October exports shrink 5% after a gap of six months

Gold import surge kept trade deficit at $13.35 bn against $10.59 bn a year earlier

Negative growth rates in major sectors such as engineering, pharma, gems and jewellery, and petroleum products saw the country’s overall merchandise exports shrink 5.04% in October. India’s exports have plunged into the negative zone after a gap of six months. An export contraction was last witnessed in March when it fell 3.15%.

Coupled with the largely unexpected decline in exports, a surge in imports of gold kept the trade deficit at $13.35 billion in October against the $10.59 billion a year earlier. The deficit was thankfully a bit lower than that in September when it stood at an 18-month high of $14.24 billion.

The fall in exports was mainly due to a weak demand in European Union markets, Federation of Indian Export Organisations president Rafeeque Ahmed said. Uncertainty over the new Foreign Trade Policy — yet to be announced — should also be removed as it is troubling exporters regarding pricing of items while entering into new contracts for orders, he added.


While exports in October contracted by 5.04% to $26 billion, imports grew by 3.62% to $39.45 billion. Oil imports shrank by 19.2% to $12.36 billion while non-oil imports rose by 18.9% to $27.08 billion.

According to Crisil Research, non-oil, non-gold exports — which is an indicator of domestic demand — continued to expand although at a significantly slower pace compared to September. Core (non-oil, non-gold) imports rose by 5.6% y-o-y in October — expanding for the sixth consecutive month, Crisil noted, adding “prior to this, core imports had been falling consecutively since May 2012, with the exception of a few months. Sustained growth in core imports in the past few months confirms that a nascent recovery in domestic demand has begun. However, the numbers are still too weak to provide a relief”.

Crisil attributed slower growth in exports to a high base effect. “Export growth a year ago had surged to 14.3% y-o-y. For the rest of this fiscal, the base effect is likely to turn favourable as export growth fell sharply in November 2013-April 2014, averaging a mere 1.9% y-o-y,” it said.

Gold imports have risen 280.4% to $4.18 billion in October. Import sectors which recorded a negative growth include transport equipment (-42.37%), project goods (-15.13%), machine tools (-12.31%), and pearls, precious and semi-precious stones (-27.11%). Exporting sectors that recorded a negative growth include engineering (-9.18%), drugs and pharma (-8.33%), petroleum products (-0.16%), gems and jewellery (-2.25%), cotton yarn/fabrics (-13.84%) and electronic goods (-30.36%).

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