Exports plod along in March, trade deficit breaches $10 bn

In a sign of deepening gloom for the economy on exports and balance of payments fronts, India's trade deficit in March zoomed once more to over $10 billion due to decline in exports and sharp upshot in oil imports.

For the full financial year 2013-14, exports missed the government’s target of $325 billion and grew a sluggish 3.98 per cent to $312.3 billion.

The trade gap in March widened to $10.51 billion, its highest since October 2013, official data showed on Friday. March exports fell 3.15 per cent from a year earlier to $29.58 billion.

Merchandise imports for the just concluded financial year too fell due to curbs on gold and silver imports that helped the full-year trade deficit to narrow $139.59 billion from last year’s over $190 billion. India’s current account deficit (CAD) for the year 2013-14 to shrank to 2 per cent of GDP or $35 billion in dollar terms.

Experts cautioned on liberalising gold imports as this may lead to a rise in CAD.
Exports to Latin America suffered a major setback with shipments to the region dropping 20 per cent in 2013-14.

Oil imports during March were valued at $15.78 billion, 17.7 per cent higher than March last year.

For 2013-14 as a whole, oil imports were valued at $167.62 billion, 2.2 per cent higher than the oil imports bill of $164.04 billion a year ago. Oil demand is expected to go up if the summer monsoons fail as farmers would be forced to rely on diesel-run pumps for irrigation.
Non-oil imports in March 2014 dropped 11.8 per cent year-on-year to $24.30 billion. For 2013-14, non-oil imports declined 13.3 per cent to $283.32 billion.

Expressing concern over the export decline, industry body CII said that exchange rate volatility, hike in global oil prices, curb on gold imports coupled with impact on jewellery exports were responsible for shrinking overseas shipments. Gems and jewellery exports declined 8.82 per cent to $39.52 billion. Petroleum exports, accounting for about 20 per cent of India's outward shipments, dipped 0.01 per cent to $60.85 billion in 2013-14.

Ficci hoped exports would recover once global growth, particularly in the US, picks up.
The Federation of Indian Export Organisations (FIEO) said outbound shipments were affected by both domestic and global factors. About Rs 20,000 crore has been held up with the revenue department as they are not clearing refunds, FIEO said.