19.8.14

Trade snippets: July 2014


Exports rose for the fourth straight month in July , benefiting from a stronger global economy , and non-oil, non-gold imports gathered pace, offering another sign that the economy is looking up. Exports during the month increased 7.3% to $27.73 billion and imports went up 4.25% to $40 billion, leaving a trade deficit of $12.2 billion, the highest since July last year. Trade deficit was $11.76 billion in June and $12.5 billion in July last year.
Rise in exports was largely driven by key manufacturing exports--engineering (23.9%), leather (17.23%), pharma (10.78%), textiles (13.3%)--and petroleum exports (28.1%). However, exports of gems and jewellery fell 17.42% despite easing of gold import norms. July saw higher order flows into India mainly on account of an improvement in the US economy , which accounts for about 10% of India's exports.
The government is expected to announce a five-year foreign trade policy (2014-19) by end of month that will not only focus on enhancing exports, but also boosting domestic manufacturing. The first four months of the fiscal saw an 8.6% cumulative growth in exports.
Higher import of petroleum and electronic goods added to the $40 billion import bill, widening the trade gap. India imported $1.9 billion of gold in July, down 26% from the year-ago month. In June, gold import had touched $3.3 billion.
India's current account deficit, which had touched a historic high of 4.7% of GDP in 2012-13, narrowed sharply to 1.7% of the GDP in 2013-14 after the UPA government raised customs duty on gold from 2% to 10% in stages, and the RBI brought in the stringent 80:20 rule for imports.
Non-oil non-gold imports were up 4.5%, suggesting a pickup in domestic economy as suggested by higher industrial production growth of 3.9% in the first quarter.



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