March trade deficit widens to $11.79 billion versus $6.85 billion in February

While exports for March fell to $23.95 billion versus $21.5 billion in February, imports rose to $35.74 billion versus $28.4 billion in February.

By ET Bureau | Apr 18, 2015, 05.02 AM IST

March trade deficit widens to $11.79 billion versus $6.85 billion in February

NEW DELHI: India’s merchandise exports fell at their sharpest pace in close to six years in March, capping a dismal fiscal 2015 when outbound shipments shrank because of a host of factors including a fall in crude oil prices, appreciation of the rupee and fragile demand conditions in key economies.

Lower exports and a sharp increase in gold imports around the festival time widened trade deficit to the most in four months in March and almost double of the previous month. Exports fell 21.06 per cent in March, the fourth straight month of decline. Most sectors, including gems and jewellery, engineering, electronics, leather and petroleum posted lower shipments.

The fiscal year ended with total exports of $310 billion, missing the $340 billion target by a huge margin, according to data released on Friday by the Ministry of Commerce and Industry. Imports, on the other hand, contracted by a modest 0.59 per cent during the year, leaving a trade deficit of $137 billion, slightly higher than the previous year’s $135 billion.

In March, growth in non-oil nongold imports was just 0.3 per cent as against 8.7 per cent in the previous month, indicating a slowdown in economic activity. The data highlight the risks to economic growth that had picked up some momentum in recent months.

“While we expect stable commodity prices to curtail the current account deficit in FY16 under 1 per cent of GDP, the weak momentum for exports remains a concern as it may cast a pall upon the economic recovery, particularly given the less-than-robust outlook for domestic demand,” said Aditi Nayar, senior economist at ratings firm ICRA. After a year’s gap, India announced a five-year foreign trade policy to give a concentrated push to both merchandise and services exports to help double total exports to $900 billion by 2019-20.

But a recovery from the current level might be challenging because of weak growth in external markets. The World Trade Organization recently cut global trade growth forecast for 2015 to 3.3 per cent from 4 per cent earlier.A stronger rupee will also not help matters, making Indian exports less competitive.

HIKE IN BULLION IMPORTS

Gold imports nearly doubled in March compared with a year earlier at $5 billion. Imports of silver shot up nearly three times. The March numbers would, however, pose little risk to the current account deficit, which narrowed to 1.6 per cent of gross domestic product in the third quarter of the fiscal year compared with a five-quarter high of 2.1 per cent in the second quarter. The Economic Survey had projected the deficit at 1 per cent of GDP in 2015-16.

India's manufacturing sector is estimated to have grown 6.8 per cent in 2014-15 against 5.3 per cent in the previous year under a revised data series released by the Central Statistics Office. A slump in global oil prices led to a 53 per cent contraction in India’s biggest import item but it also pulled down petroleum exports, which fell 59.5 per cent in March. Global crude oil price, after touching a low of $45 per barrel in January, has recovered and closed at $56 on Thursday.

Contraction in engineering goods deepened to 2.55 per cent as against 0.76 per cent in the previous month. Growth in readymade garment exports slowed to 2.83 per cent in March versus 8.67 per cent in February. In pharmaceuticals and gems and jewellery, exports contracted by 2 per cent and 8.36 per cent, respectively. “Exports must be declared as a priority sector and the interest subvention scheme to exporters must be restored to arrest the fall in exports,” said SC Ralhan, president of the Federation of Indian Export Organisations.

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10 salient features from new Foreign Trade Policy to push up India's exports

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Text: ET Bureau

With an aim to make India a significant partner in global trade by 2020, the government on Wednesday unveiled a new Foreign Trade Policy (FTP).

Talking about the new policy, which aims at boosting India's exports, Commerce Minister Nirmala Sitharaman said that PM Narendra Modi's pet projects, 'Make in India' and 'Digital India' will be integrated with the new Foreign Trade Policy.

The government is pitching India as a friendly destination for manufacturing and exporting goods, and the new policy is being seen as an important step towards realising that goal.

We take a look at some key features of the new Foreign Trade Policy:

Image: Minister of State for Commerce & Industry (Independent Charge), Nirmala Sitharaman with Revenue Secretary Shaktikanta Das and Commerce Secretary, Rajeev Kher releasing the “Foreign Trade Policy 2015-2020” in New Delhi on April 1, 2015.