India's Oct trade deficit at $14.02 billion

Mae Love
November 15, 2017

Exporters have blamed the implementation of the Goods and Services Tax (GST) that has "squeezed" the working capital for exporters for the decline.

The trade deficit widened to nearly three-year high of United States dollars 14 billion during the last month as against USD 11.13 billion in October 2016 as imports surged. Following an increase of 12.72 percent, exports increased to $1.88 billion in October 2017 from $1.675 billion a month before while imports after a growth of 10.19 percent, increased to $4.929 billion in October 2017 from $4.47 billion in September 2017.

He said there is sharp fall in major labour-intensive sectors like leather and leather products, gems and jewellery, handicrafts, ready-made garments and carpets among others.

Imports of coal (66.3%), petroleum, crude and products (27.9%), chemicals (30.5%), machinery (17.4%), and electronics goods (7%) expanded in October.

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While engineering goods, one of the top exports from India, continued to increase, there was a slowdown in pace.

Imports rose by 7.6% in October to $37.1 billion. Total imports during the seven-month period increased 22.21 per cent to $256.43 billion. He added that EEPC hoped that the new refund regime for the exporters worked well.

"The contraction in merchandise exports in October partly reflects an unfavourable base effect, as well as upfronting of shipments to the previous month", she added.

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". Mr Gupta said that there is immediate need for remedial measures to prevent further decline in exports otherwise the situation may be worse for November, 2017. In October, petroleum, engineering and chemicals exports grew by 14.74 per cent, 11.77 per cent and 22.29 per cent, respectively. It had stood at almost $9 billion in September and $11.1 billion in the year-ago period. "The global Brent prices ($/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. Trade deficit increased to $3.04 billion in October 2017, higher by 35.88 percent over $2.2 billion for the same a year before.

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