India’s trade deficit touched a 56-month high in January, driven by a sharp rise in imports of petroleum, chemicals, silver, pearls and machine tools, even as exports expanded for the third consecutive month.
A 9% rise in exports at $24.3 billion was outweighed by a 26% increase in imports at $40.6 billion, leaving a trade gap of $16.3 billion, the highest since May 2013.
Petroleum and crude oil imports continued to inflate India’s import bill, rising 42.64% from last year to $11.65 billion. Imports of pearls and precious and semi-precious stones jumped 55.71% to $2.4 billion. However, gold imports declined 22% to $1.59 billion last month.
In the April-January period, trade balance was $103.7 billion.
Five sectors — coal, chemicals, precious metals, petroleum and machinery — showed at least $500 million of increase in imports from a year earlier.
On exports side, outward shipments increased in 20 out of 30 sectors, but declined in traditional sectors like yarn and ready made garments whose competitive edge could have been blunted by an appreciating rupee.
Exports of readymade garments fell 8.4% to $1.39 billion, while cotton yarn and fabric shipment declined 9.6% to $0.84 billion.
Major commodity groups which showed growth in exports were engineering goods (15.77%), petroleum products (39.5%), gems & jewellery (0.89%), organic & inorganic chemicals (33.6%) and drugs & pharmaceuticals (8.6%).
A slowdown in exports from labour-intensive sectors like garments, carpets, handicrafts and man-made textiles was primarily due to liquidity crunch as tax refunds have been getting blocked since the introduction of goods and services tax, FIEO said in a statement.
Exporters urged the government to look into the refund issue “seriously” by undertaking a drive so as to clear all cases by March 31, 2018.