India’s goods exports growth declined by (-) 1.12% in October this year to $23 billion, the lowest pace of growth since (-) 6.86% in July 2016, which was the last time the shipments growth fell in the negative growth territory, according to data released by the commerce ministry on Tuesday.
The fall, the first after 14 consecutive months of positive growth, was understood to be due to the impact of the Goods and Services Tax (GST) on the export segment. Twelve of the 30 major export groups registered a decline in October, including labour-intensive sectors such as gems and jewellery (-24.51%), ready-made garments (-39.23%), carpet (-31.32), handicrafts (-9.08%), man-made yarn/made-ups (-5.91%), and leather items (-9.81%). Also in the red were electronic goods (-6.75%), drugs and pharmaceuticals (-8.75%), mica, coal and other ores (-4.19%), fruits and vegetables (-27.53%), tobacco (-7.98%).
Imports rise
Imports during October went up by 7.6% to $37.1 billion. This widened the trade deficit to $14.01 billion, the highest since $14.08 billion in May 2017.
T.S. Bhasin, chairman of apex engineering exporters body EEPC India, said in a statement that “the setback can be traced to disruptions due to roll out of the GST that resulted in squeezing of working capital for exporters. Otherwise, there is no other plausible reason for the exports to fall in the midst of recovery in the global markets which was so evident in the previous months.” He further said, “Though engineering exports continued to grow by double digit (11.77% growth in October), the pace has slowed,” adding that “we hope that the new refund regime for the exporters works well.”
G.K. Gupta, president, Federation of Indian Export Organisations, also said in a statement that “the fall was expected as exporters, particularly small and medium ones, were facing liquidity problem to pay GST for four months in a row without getting any refund.” He added, “that there is immediate need for remedial measures to prevent further decline in exports otherwise the situation may be worse for November 2017. Implementation of the measures approved by the GST Council is not taking place, as a result challenges faced by the exporters remain the same.” He added that exports should be kept out of the purview of GST as paying the tax first and getting refund later is cumbersome, in turn affecting exports.
Non-petroleum and non-gems and jewellery exports in October 2017 rose 2.48% to $16.6 billion. Petroleum products exports increased 14.74% to $3.18 billion. Exports during April-October 2017-18 increased by 9.62% to $170.28 billion. Oil imports in the month were 27.89% higher at $9.28 billion. “... the global Brent prices ($/bbl) have increased by 15.87% in October 2017 vis-à-vis October 2016 as per World Bank commodity price data (The pink sheet),” the ministry said. Non-oil imports were 2.19% higher at $27.8 billion.
