India's exports contracted over 11% to $23.9 billion in January , the sharpest decline in two-and-a-half years, due to a fall in international oil prices but a sharper fall in imports, again due to crude, meant that the trade deficit narrowed to an 11-month low of $8.3 billion.
Lower international prices of petroleum products meant that exports almost halved to $2.3 billion in January 2014, compared to over $4.6 billion a year ago. At the same time imports fell 11.4% to $32.2 billion during January as oil imports shrank over 37% to $8.2 billion on account of lower crude prices.Non-oil imports were, however, 3.5% higher at close to $24 billion. Gold imports in January grew 8% to $1.5 billion.
Apart from oil products, among the more prominent items in India's export basket, gems and jewellery were down nearly 4% due to a protracted slowdown in Europe, along with chemicals (around 11%) and cotton yarn and fabrics (9%).
The decline in exports ahead of the Budget is expected to result in fresh calls for sops in the wake of low demand in Europe, a key market for Indian textiles, gems and jewellery and other exports. This was the second straight month of fall in exports and is the steepest drop since the 14.8% decline in July 2012.
The finance ministry has held back fresh benefits for exporters so far this fiscal due to paucity of funds. Commerce and industry minister Nirmala Sitharaman has failed to even announce the five-year Foreign Trade Policy , which was due last April, as North Block refused to play ball with her strategy.
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