Exports fall 1.12% to $23bn in Oct, trade deficit widens

NEW DELHI: Exports for October fell by 1.12% to $23 billion which in turn led to trade deficit hitting a 35-month high. Exporters blamed the lack of liquidity due to delay in refund of payments under Goods and Services Tax (GST) for four months for the decline in exports.

Sanjeev Sharma

Tribune News Service

New Delhi, November 14

Exports for October fell by 1.12% to $23 billion which in turn led to trade deficit hitting a 35-month high. Exporters blamed the lack of liquidity due to delay in refund of payments under Goods and Services Tax (GST) for four months for the decline in exports. They claimed that the implementation of the measures approved by the GST Council was not taking place.

Ganesh Kumar Gupta, president, Federation of Indian Export Organisations (FIEO) said there was an immediate need for remedial measures to prevent further decline in exports otherwise the situation may be worse for November.

The FIEO said exports figure for the month of October for the first time after 13 months in a row, have shown negative growth of 1.12%.

There is a sharp fall in major labour-intensive sectors like leather and leather products, gems and jewellery, handicrafts, readymade garments and carpets.

Exports declined in October, retreating from a six-month high growth in September. Trade deficit widened to $14 billion during the month under review as against $11.13 billion in October last year.

Aditi Nayar, Principal Economist, ICRA, said with headline merchandise exports contracting after a gap of two months, the merchandise trade deficit widened to a 35-month high of $14 billion in October, despite a slowdown in import growth to single-digit after eight consecutive months.

ICRA estimates that every $1 increase in the price of the Indian crude oil basket would bloat annual net oil imports and the current account deficit by $1.2 billion. The sharp merchandise trade deficit for October and the rise in crude oil and other commodity prices portend a sequential uptick in the current account deficit for Q3 FY2018, despite the expectation of subdued gold imports.