India’s trade deficit widened to its highest in 35 months in October as merchandise exports declined for the first time in 14 months, government data showed.
Exports during October 2017 were valued at US $23,098.18 million as compared to $23,360.61 million during October 2016, registering a decline of 1.12%, according to data released by the Ministry of Commerce and Industry on Tuesday.
Imports, meanwhile, expanded at the slowest pace in 10 months, at 7.6%. Imports during October 2017 were valued at US $37,117.01 million as compared to US $34,495.09 million in the same period in 2016.
The trade deficit for October 2017 was estimated at $14,018.83 million as against the deficit of $11,134.48 million during the corresponding period in 2016, the ministry said.
Exports of plastic and linoleum (24.5%), chemicals (22.3%), petroleum products (14.7%), engineering goods (11.7%) and marine products (8.52%) grew.
Export of ready-made garments (39.2%), gems and jewellery (24.5%), and drugs and pharmaceuticals (8.8%) declined, Mint reported.
Imports of coal (66.3%), petroleum, crude and products (27.9%), chemicals (30.5%), machinery (17.4%), and electronics goods (7%) expanded in October.
“The decline in exports was expected because exporters were struggling with a liquidity crunch after paying the Goods and Services Tax for four months in a row without getting any refund,” Federation of Indian Export Organisations President Ganesh Kumar Gupta told Mint.
“Though the merchandise trade deficit rose sharply in October, it may not be a source of alarm,” Principal Economist at Icra, Aditi Nayar, was quoted as saying. She said that the average trade deficit for September-October is in line with the trend during July and August.
“The contraction in merchandise exports in October partly reflects an unfavourable base effect, as well as upfronting of shipments to the previous month,” she added.