Even though goods exports declined for the seventh time in eight months in September, India’s weak foreign trade performance so far this year appeared to be turning around as per data released by the Commerce Ministry on Friday, which included revisions worth over $5 billion to August’s trade tally.
While goods exports dipped 2.6% from last September to hit a three-month low of $34.47 billion, imports dropped by a sharper 15% to $53.84 billion, and were 10.4% below August’s updated import bill of $60.1 billion, which marked an 11-month high.
August’s goods exports were ramped up by a record $4 billion to $38.45 billion, the highest in five months and reflecting a 3.88% growth over last August. This was the first uptick after six months of contraction and Commerce Secretary Sunil Barthwal expressed hope that the second half of 2023-24 will bring sustained growth in goods exports.
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Revised figures
The revised goods trade deficit in August stood at $21.65 billion, instead of the 10-month high of $24.2 billion reported earlier, and eased further to $19.37 billion in September. The overall goods deficit in the second quarter of 2023-24 is now $59.4 billion, just 5.6% over the first quarter tally, belying economists’ fears that weaker trade balances originally reported for July and August may exacerbate the country’s current account deficit.
On a year-on-year basis, September’s goods trade deficit was 31% lower and narrowed the tally for the first half of the year to $115.9 billion, 17.7% lower than a year ago. This is because of a steeper 12.2% decline in imports between April and September 2023, in comparison to exports which are now down 8.8%.
Estimates for exports of services in September also indicated a mild 0.5% uptick, compared to a 0.4% decline in August. The final services exports numbers for these two months will be released by the Reserve Bank of India later.
Import bill down
“So far this year, oil exports have declined 17.5%, but non-oil exports have held up better and dropped only 6.3%,” said Bank of Baroda economist Aditi Gupta. However, non-oil and non-gold imports, a proxy for domestic demand, have remained weak and declined by 10% over the last year, she pointed out.
Top Ministry officials, however, stressed that the volumes of inbound shipments remained stable even as the year-on-year decline in prices of commodities, especially petroleum and edible oils, caused the import bill to dip in September. Lower prices also pared the value of petroleum exports, though shipment volumes were 22.1% higher between April and August.
Among major sectors, the exports of gems and jewellery, down 24.3% so far in 2023-24, were the worst hit, followed by chemicals (-15.8%) and textiles (-8.6%). Imports of gold, whose prices have risen 8% this year, are up 9.8%, and may rise further due to festive spending in this quarter.
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