NEW DELHI: India’s merchandise exports grew for the third consecutive month in November with 20 of the 30 export sectors registering a growth in outward shipments, but higher imports due to spike in gold purchases led to sharp increase in trade deficit.
In November, exports added $20 billion compared with $19.5 billion a year ago, an increase of 2.9%, data released by the government showed. The overall exports in April-November also turned positive showing a growth of 0.1% during the period. November exports were down from $23.5 billion recorded in October, indicating that demonetisation may have hit shipments. Imports increased at a sharper 10.4% at $33 billion compared with $29.8 billion in the year ago period, leaving a trade deficit of $13 billion.Trade gap in November 2015 was $10.3 billion. “Overall, the trade balance has improved,” said commerce and industry ministry in a release on Thursday.
“The sentiment still remains low in the global market and factors like US Fed rate hike and demonetisation have also in some way added to the woes of the exporters, which may be seen in the figures of coming months,” said SC Ralhan, president of the Federation of Indian Export Organisations.
The impact of demonetisation has so far been limited only to the logistics. However, the US Federal Reserve’s 25 basis point rate hike could subdue exports growth vis-à-vis other emerging economies even though a stronger dollar means higher earnings in rupee terms. Oil imports in November grew 5.89% to $6.83 billion while non-oil imports rose 11.7% to $26.18 billion. Firming of global oil prices is expected to augur well for Indian exports.
GOLD, JEWELLERY
Gold imports increased 23% to $4.3 billion from $3.5 billion in November last year. Pearls, precious and semiprecious stones’ imports rose a sharp 61%.
However, gems and jewellry exports were down 12% in the month. Part of the gold imports could also have been due to the demonetisation with various reports showing high gold purchases to absorb cancelled currency.
“The sharp rise in gold imports in November 2016 reflected inventory replenishment, festive season and wedding demand as well as some impact of demonetisation. If the recent amendments to the Income Tax Act dispel demand for holding of gold as well as jewellery, the gold import volumes may decline significantly in the coming months,” said Aditi Nayar, principal economist at ratings firm ICRA.
Source: economictimes.indiatimes.com