Exports fall 1%, imports rise 7.6%, trade deficit widens to $14 bn in Oct

The Dollar Business Bureau

India’s merchandise exports, during October this year, declined for the first time in the last 14 months as exporters were facing a liquidity crunch due to delay in refunds under the regime of Goods and Services Tax (GST).

On the other hand, imports during the month were increased by 7.6%, leading to the highest trade deficit in the past 35 months.

Exports declined by 1.12% in October 2017 to $23.1 billion as compared to $23.36 billion during the same month last year, according to the data released by the Ministry of Commerce.

“However, during April-October 2017-18 period, the exports have exhibited a positive growth of 9.62%,” it added.

The cumulative value of exports during the seven-month period of the current fiscal was $170.3 billion as against $155.3 billion in the year-ago period.

In October, major commodities which recorded a positive growth in outbound shipment are plastic & linoleum (24.46%), organic & inorganic chemicals (22.29%), petroleum products (14.74%), engineering goods (11.77%), marine products (8.52%) and cotton yarn/fabrics/made-ups, handloom products etc (4.83%).

In the month of October, the country’s imports stood at $37.1 billion, an increase of 7.6% as compared to $34.5 billion in October last year.

During the period April-October, the cumulative value of inward shipments of goods was $256.4 billion as against $209.8 billion in the same period a year ago, registering a positive growth of 22.21%.

The trade deficit for October 2017 was estimated at $14 billion as against the deficit of $11.1 billion during October last year.

For April-October period, the overall trade deficit, taking merchandise and services together, is estimated at $52.5 billion as compared to $22.1 billion during the same period a year ago.

Commenting on the export data, Ganesh Kumar Gupta, President, Federation of Indian Export Organisation (FIEO) said that the fall was expected as exporters, particularly, MSME (medium and small scale enterprises) were facing liquidity problem to pay GST for four months in a row without getting any refund.

“There is an immediate need for remedial measures to prevent further decline in exports otherwise the situation may be worse for November, 2017. Implementation of the measures approved by GST Council is not taking place as a result challenges faced by the exporters remain the same,” he added.

Gupta said that there is sharp fall in major labour-intensive sectors such as leather & leather products, gems & jewellery, handicrafts, readymade garments, carpets etc. The decline in these highly employment-intensive sectors is a worrisome sign.

He suggested that exports should be out rightly kept out of the purview of GST as paying the tax first and getting refund is cumbersome, complex and complicated, affecting exports.