NEW DELHI: India’s exports continued to contract for the sixth straight month in a row in May on sluggish global demand, fluctuation in rupee value and prices of petro products.
According to government data released on Tuesday, outbound shipments dropped over 20% in the month under review to $22.3 billion from nearly $28 billion in the year-ago period.
Imports too declined by 16.5% for the month to $32.8 billion — the steepest since February 2014 when imports contracted by a tad over 17%.
Trade deficit also narrowed to a three-month low of $10.4 billion in May from $11.2 billion a year ago. It was nearly $6.9 billion in February.
Exports had last showed an uptick in November 2014, expanding 7.3%. This marks the current phase as the longest spell of decline and underlines the government’s imperative to boost demand at home.
Petroleum products, gems and jewellery, engineering and chemicals — considered the bulwark of exports — all reported negative growth in May. The prime reason for this decline continues to be the low prices of crude, metals and commodities as well as slowdown in offtake by main western markets.
Oil imports dropped almost 41% in May to $8.5 billion. Non-oil imports declined by 2.2% to $24.2 billion.
But gold imports grew 10.5% to $2.4 billion from just under $2.2 billion in the year-ago period on declining prices and easing of restrictions by the RBI.
Any increase in gold imports impacts the current account deficit (CAD). The RBI and the government have maintained that the CAD level is comfortable, but a rise in gold imports may spark fresh worries.
The RBI had in November last year scrapped the 80:20 scheme, put in place in August 2013 to keep gold imports under check, in which at least 20% of the imported gold had to be exported before bringing in new lots.
India is the largest importer of gold, which mainly caters to the demand of the jewellery industry.
During April-May, the first two months of the 2015-16 fiscal, exports fell 17.2% to $44.4 billion. Imports declined 12.2% to $65.8 billion, resulting in a trade deficit of nearly $21.4 billion.
In March, the last month of the previous 2014-15 fiscal, exports had contracted 21%, the biggest fall in the last six years.
