Trade deficit narrows to $8.13 billion
The only “green shoot” in the Indian economy, exports growth, contracted in February for the first time in eight months. Exports growth declined by 3.7 per cent to $25.7 billion from $26.7 billion in February 2012, according to official data released on Tuesday.
Against the government’s exports target of $325 billion for the current financial year, with just one more month to go before it ends, cumulative exports for April 2013-February 2014 stand at $282.8 billion.
“We have reached $282 billion, and if we will follow the same trend as we did last March, it (exports) should be close to $310 billion (by the end of the current fiscal),” Commerce Secretary Rajeev Kher told reporters here. India’s exports in March 2013 had risen 6.97 per cent. “I will not be happy with $310 billion. We need to have better performance...We have not done well as we should have,” he added. Mr. Kher hoped that exports from the textiles and pharmaceuticals industries would improve in the months ahead. After the peak of 13.47-per cent growth in October, exports have been losing momentum. Major export sectors, including petroleum, engineering and pharmaceuticals, declined in February.
Imports, too, fell in February; 17.1 per cent to $33.8 billion. However, the greater decline in imports improved the trade deficit to a five-month low. Led by a 70 per cent drop in gold imports to $1.6 billion, the trade deficit narrowed to $8.13 billion. A 12.7-per cent contraction in non-oil non-gold imports helped, too. Oil imports declined by 3.1 per cent to $13.6 billion. Exporters’ body Federation of Indian Export Organisations (FIEO) said that due to the decline in overseas shipments, India’s exports would fall short of target by about $15-18 billion. “Credit is the biggest problem which the exporters are facing. Arrears of duty refund claims have crossed Rs.20,000 crore. Global demand is there, but we are unable to take advantage of this due to credit problem,” FIEO President Rafeeque Ahmed said.
In its response to the FEO President’s statement, the Central Board of Excise and Customs (CBEC) denied that customs, excise duty and service tax refunds/drawbacks were being held up by the Department. “More amounts have been refunded in 2013-14 compared to the corresponding period in the previous year,” the statement said.
“The economic conditions in the U.S. and the euro zone are not very favourable for exports, and we hope the Indian government will help the exporters ...and help them reach the export target,” said Confederation of Indian Industry’s National Committee on Exports and Imports Chairman Sanjay Budhia.
Federation of Indian Chambers of Commerce and Industry (FICCI) President Sidharth Birla said “though over 40 per cent contraction in India’s trade deficit is a positive development, nearly 4 per cent dip in exports in February is worrisome, and now it looks doubtful if we would be able to achieve the target of $325 billion in the full fiscal year. While this partly reflects sluggish recovery in global demand, domestic factors like negative growth in manufacturing have also been responsible for such weak export performance”.