India’s trade deficit narrowed by nearly 8% to $15.28 billion during the last month, as against $16.6 billion in June 2018, according to official data released on Monday.
In June 2019, merchandise exports fell nearly 10% to $25.01 billion as against $27.70 billion in the year-ago month, the Commerce Ministry data showed. In rupee terms, exports stood at ₹1,73,682.55 crore, down 7.52% from ₹1,87,800.20 crore in June 2018.
“Department of Commerce is pro-actively pursuing an export promotion strategy involving conscious engagement with the EPCs and exporters to quickly address domestic and overseas constraints impacting exports... A special initiative is underway with respect to China and the U.S. in light of opportunities offered by their trade dispute,” an official release said.
The data showed that merchandise imports too declined during the month under review from $44.30 billion to $40.29 billion, a fall of 9.06%.
In rupee terms the decline was 6.85% from ₹3,00,351.83 crore to ₹2,79,771.07 crore in June 2019.
“The decline in exports in June 2019 is due in large part to a base effect of an extraordinarily good month in June 2018 impacting growth figures for June 2019. While average exports in June have been $22-23 billion since 2015-16, exports in June 2018 were relatively quite high at $27.70 billion,” the release said.
It added that the negative growth is consistent with certain global trends, which have impacted India’s exports in recent months. The World Bank, in its Global Economic Prospects (June 2019), has projected weakening of global trade in 2019. Global trade is projected to grow at 2.6% this year – a full percentage point below their previous forecast.
The major commodities which led to this decline were petroleum products, rice, cotton yarn/Fabrics/made-ups, gems and jewellery, ready-made garments, organic & inorganic chemicals, and Engineering goods.
“Temporary shutdown of ONGC Mangalore Petrochemical Limited ... for maintenance has adversely impacted exports of petroleum products. Jamnagar refinery also experienced a routine maintenance related disruption in June 2019, which is likely to abate by mid-July 2019. The fall in the global Brent price ($/bbl) by 15.81% in June 2019 vis-à-vis June 2018 as per data available from World Bank, is also a factor in the declining value of petroleum product exports,” the release said, added that engineering goods have been affected because of a fall in global prices of steel.
On imports, the Commerce minister said that import of petroleum crude & products in June 2019 ($11.03 billion) has recorded a negative growth of 13.33% from a year earlier.
Meanwhile, reacting to the decline in exports, FIEO President Sharad Kumar Saraf said that such a de-growth in exports is a reflection of sluggish global demand and rising tariff war. The softening of crude and steel prices also pulled down exports.