Imports Grow at Slowest in 12 Months.

Merchandise imports grew at the slowest pace in 12 months in October on a lower oil bill and a high base, even as petroleum prices have risen.

Imports grew 6.8% to $25.9 billion ('1.18 trillion) in October, commerce ministry data showed. While oil imports grew at 0.3%, non-oil imports rose 9.9% during the month.

It's not clear why the month's oil import growth is marginal.

"Petroleum prices have gone up and the oil bill should have reflected that," said D.K. Joshi, chief economist at Crisil Ltd. "Also, domestic demand is very robust as shown by private consumption data and should be getting reflected through higher import demand."

Second-quarter gross domestic product data released by the government on Tuesday showed private consumption growing at a robust 9.3% in the July-September period.

The slower import growth is a result of the large base effect from the surge in imports in October 2009 distorting the year-on-year comparison rather than a fundamental change in India's reliance on imports to meet strengthening domestic demand, Matt Robinson, senior economist at Moody's Economy.com, said in a report on Wednesday.

Robinson said the depreciation of the local currency almost by 3% against the dollar since the start of November will provide some relief to Indian exporters in the coming months and inflate rupee-denominated export receipts.

"Nevertheless, strong domestic demand will ensure imports continue to exceed exports," he said.

During October, exports grew 21.3% to $17.9 billion while the trade deficit widened marginally to $9.7 billion.

The deficit is manageable, said A. Sakthivel, head of industry lobby group Federation of Indian Export Organisations.

"The growth in exports is primarily due to the overall improvement in the export scenario across products, barring a few," Sakthivel said. He added that much of this was due to the diversification of export markets pushed through in the last one-and-a-half years.

Last week, the commerce ministry constituted a group of top bankers and industrialists, including State Bank of India chief O.P. Bhatt, Ashok Leyland Ltd managing director R. Seshasayee and Hero group chief Pawan Munjal to advise it on raising India's export competitiveness and doubling overseas shipments to $400 billion in the next three years. Commerce minister Anand Sharma has said the department of foreign trade is carrying out reviews of the export sectors which will be completed by December

Source : istockanalyst.com