Non-oil exports grew by 2% in March 2018, the third consecutive month of sub-5% growth, as compared with the 11% average in April-December FY18.
While India’s exports grew 10% y-o-y in FY18, imports grew at a faster clip—at 20%—widening the trade deficit to $162 billion, higher than $109 billion in FY17 and the highest since FY13. The widening was due to higher oil, gold and electronic imports.
Non-oil exports grew by 2% in March 2018, the third consecutive month of sub-5% growth, as compared with the 11% average in April-December FY18. The slowdown in headline and non-oil exports was due to base-effect and some moderation in global trade. Exports of ready-made garments continued to decline in March due to GST woes and currency appreciation. Labour-intensive sectors such as ready-made garments, gems & jewellery, etc, continued to struggle and, worryingly, imports from these sectors remained strong during this period, resulting in deterioration in labour-intensive trade surplus.
Net capital goods exports remained in deficit for the 12th consecutive month, with a shortfall of $60 billion as compared with a surplus of $1.2 billion in March 2017, due to a relatively sharp expansion in capital goods imports.
Import of oil and gold slowed down in the last couple of months, but the growth of non-oil and non-gold imports remains robust. Going forward, any major acceleration in exports is unlikely, owing to moderating global trade.