Merchandise exports down 10.3% in July, trade deficit widens

After a raft of positive economic data, India’s foreign trade capped the week with some disappointment. Merchandise Exports were down 10.3 per cent in July to $23.3 billion. This was the eighth straight month of contraction in exports.

Imports, too, declined by 10.28 per cent to $35.94 billion in July, due to a fall in oil imports. Trade deficit recorded an 8-month high of $12.81 billion, government data showed.

Petroleum exports was the hardest hit due to softening of crude oil prices in the global market. Petroleum product shipments were down by 43.22 per cent, leather and leather goods by 10.15 per cent, marine products by 17.6 per cent and chemicals by 6.22 per cent.

On the imports side, oil imports came down 35 per cent to $9.48 billion. Oil imports account for about 31 per cent of the total imports. But gold imports increased by 62.22 per cent to $2.96 billion. Gold is the major contributor in India’s increasing trade deficit. Non-oil imports too grew by 3.8 per cent.

India’s premier exporters body expressed concern but said that August may be a turnaround. “It is a matter of concern as the decline is continuing. But going for the figures of 10 days in August, we are expecting a little turnaround in August. From September, there will be the impact of base effect,” Federation of Indian Export Organisations (FIEO) President S C Ralhan said.