In the month of February, India’s exports grew by 4.5% and the trade deficit narrowed to $12 billion from $14 billion recorded in the previous month, which experts said brought some respite yet the overall trend is still worrying. “The trade deficit in February 2018 printed considerably higher than the year-ago level, signalling that a sharp Y-o-Y deterioration in the current account deficit in the last quarter of the current fiscal is imminent,” Aditi Nayar, Principal Economist, ICRA said.

The Commerce Ministry on Thursday said that India’s exports have been on a positive trajectory since August 2016, except for a temporary setback in October 2017. However, the Federation of Indian Export Organisations (FIEO) said that exports data for February were not encouraging.

The exports body said that engineering, apparels, gems and Jewellery, cotton textile and carpets are showing negative growth. “We are worried about gems and Jewellery exports,” Ganesh Kumar Gupta, President, FIEO said, adding that the sector is facing huge liquidity issue as banks are tightening their norms.

Aditi Nayar, too, said that pace of exports of gems and jewellery would take a cue from demand, as well as the availability of funding for this sector in the aftermath of the fraud reported by PNB. “Export growth was dampened by contraction in textiles, iron ore, engineering goods and gems & jewelery.

“Import growth outpaced that of exports despite the contraction in imports of gold and transport equipment in February,” she added.

Commerce Secretary Rita Teaotia told reporters on Thursday that India’s merchandise exports are showing continuous positive growth. The positive growth in merchandise imports on a Y-o-Y basis in February 2018 was predominantly led by Petroleum, Oil and Lubricants and electronic goods. Besides merchandise, it was the services sector that showed a remarkable growth.

The services exports outpaced services imports by expanding 20.4% growth as against 17.1% growth in imports. The services surplus rose to a 25-month-high to US$6.5 billion in January 2018.