Trade deficit widens to a record $21 billion

A jump in imports of gold and petroleum products has pushed up imports even as exports recorded a 1.63 per cent fall in October on a year-on-year basis, as the trade deficit widened to a record $21 billion.

The rate of fall in exports, at $23.2 billion, was much lower than the 11 per cent dip recorded in September coming as a relief of sorts. Exports in October of last year were valued at $23.63 billion. Imports expanded by 7.37 per cent to $44.2 billion last month, highest in 18-months, leaving a trade deficit of $20.96 billion. Prior to this, the highest monthly import was $45.2 billion in May 2011.

Talking to reporters here, Commerce Secretary S. R. Rao said the export performance had improved slightly in October as compared to September. However, he said imports had gone up due to high demand for gold and petroleum products. “As world trade is contracting in a continuous process, it will have an import on India’s trade also,” he added.

For the first seven months (April-October) of the 2012-13 fiscal, exports shrunk by 6.18 per cent to $166.92 billion. Imports during the period have dipped by 2.66 per cent to $277.13 billion. Trade deficit for the period thus stands at $110.2 billion.

Oil imports in October increased by 31.6 per cent year-on-year to $14.78 billion while non-oil imports declined by 1.73 per cent to $29.42 billion.

Oil imports

During April-October, oil imports grew by 10 per cent to $95.5 billion from $86.8 billion in the corresponding period last year. However, non-oil imports dipped by 8.22 per cent year-on-year to $181.56 billion.

The Federation of Indian Export Organisations (FIEO) President Rafique Ahmed said that the arrest of decline in exports in October pointed to recovery.

He said that the decline in exports was primarily on account of slowdown in domestic manufacturing.

Mr. Rao said the Directorate-General of Foreign Trade (DGFT) was reviewing the performance of different segments of the export sector. “The DGFT has done an extensive consultation with all the stakeholders. I think the review will be completed in the next two days,’’ he said.

He said after the analysis of the export sector, the Minister would take a call on whether there was any requirement of mid-term review of the Foreign Trade Policy (FTP) and whether any specific steps were needed to boost exports.

When asked whether the government would provide some support to exporters, the Secretary replied in the affirmative.

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