Exports shrink 1.5% in July, trade deficit widens to $23.5 billion

NEW DELHI : India’s merchandise trade deficit rose to the highest level in nine months in July on the back of high crude imports and a contraction in overall goods exports after three straight months of positive growth.

Exports contracted 1.47% on year to $33.98 billion in July, while imports rose 7.4% to $ 57.48 billion. The trade deficit of $23.5 billion registered in the month was the highest since October, when it touched $30 billion.

The key reason for the relatively higher deficit in July was a 17% increase in crude oil imports during the month to $ 13.8 billion while imports of petroleum products fell 22% on year to $ 5.2 billion, officials said.

“India’s GDP is growing at more than 7% and the world is growing at 3%, therefore our domestic consumption is going to grow more. Perhaps that is also reflecting on crude imports. Domestic consumption (of auto fuels) is leaving less for the exportable surplus,” commerce secretary Sunil Barthwal said.

For April-July exports have grown at 4.15% to $ 144.2 billion while imports have grown 7.57% to $ 229.7 billion. “Export growth has to be seen over a period of time which is significant when looking at what is happening around the world whether protectionism or other gro-political issues,” he added.

The exports in July were supported by the performance of the engineering products, electronics, drugs and pharma and readymade garments. Engineering exports grew 3.6% to $ 9 billion, electronics exports grew 37.3% to $ 2.8 billion, pharma exports were up 8.3% to $ 2.3 billion while ready made garments exports expanded 11.8% on year to $ 1.2 billion. Significant growth was also seen in tea, tobacco, spices and meat and dairy products.

Barthwal said despite the dip, the exports for the full year will be higher than the last year’s level of $ 437.1 billion.

Services exports in July grew 8.4% to $ 28.43 billion while imports were up 5.8% to $ 14.5 billion. In April-July the services exports grew 9.8% to $ 117.3 billion while imports during the period were up 6.3% to $ 62.95 billion.