India’s exports fall 6.8%, imports down 19% in July

The Dollar Business Bureau

India’s merchandise exports (including re-exports) have declined 6.84% at $21.7 billion during July, 2016 when compared to $23.3 billion in the same month last year. The cumulative exports for the first quarter (Q1) of FY 2017 have come down 3.62% at $87 billion against $90 billion over corresponding period last fiscal year. 

The country’s imports have contracted 19% during July 2016 at $29.4 billion when compared to $36.4 billion in same month previous year. The overall value of imports has shrunk 16.3% at $114 billion in Q1 of FY 2017 against $136 billion during the corresponding period previous fiscal, as per the Commerce Ministry’s foreign trade data released on Friday. 

The negative growth in exports is in-line with other major economies that have witnessed a fall in the exports. US, Japan and China have seen a decline of 6.6%, 1.8% and 5.5% respectively in their exports. However, the shipments from European Union have increased 1.4% during May, 2016 over the same month a year ago, according to the information provided by the World Trade Organization (WTO). 

The merchandise trade deficit is estimated at $27 billion in Q1 of FY 2017 while it was projected at $46 billion during the same quarter previous fiscal. The overall trade balance, merchandise and services together, stood at $10.8 billion in Q1 of FY 2017 which is 63.38% lower than the level of $29.5 billion during Q1 of FY 2016, the Reserve Bank said in a press release on Friday. 

Credit rating agency ICRA’s Senior Economist Aditi Nayar said that the increase in merchandise exports during June 2016 has proved to be temporary with de-growth in the last month. The merchandise trade deficit may remain subdued till the gold demand picks up in the country. Moreover, imports of iron & steel, coal and fertilisers are likely to be muted. 

The decrease in the services trade surplus during the month of June is a major cause of concern. ICRA expects a slight current account surplus during Q1 of FY 2017 due to the low gold imports, she further said.