Trade deficit falls as gold imports continue to plummet

India’s exports grew at a sluggish 3.5 per cent to $26.34 billion in December 2013 compared to the corresponding year-ago period.

The unplanned maintenance shutdown of Reliance Industries’ Gujarat refinery contributed largely to the slowdown as the plant is a major exporter of petroleum products, Commerce Secretary S. R. Rao told newspersons on Friday, adding that it was a short-term hitch.

Despite the low export growth, the trade deficit stayed on leash dropping to $62.77 billion in December 2013 compared with $96.14 billion in December 2012. This was largely because of the continued fall in gold and silver imports, which declined by 68.3 per cent to $1.7 billion after various restrictions were put in place. Overall, imports during the month declined by 15.25 per cent to $36.48 billion.

The Government is keen to keep the trade deficit in check to bring down the current account deficit and prevent a possible balance of payments crisis.

“Except petroleum, exports of all other product groups that contribute significantly to the export basket have shown growth. We are confident of achieving the export target of $325 billion,” Rao said.

In the first three quarters of 2013-14, exports posted a growth of 5.9 per cent to $230.33 billion. Imports dropped by 6.55 per cent to $340.37 billion. Trade deficit during the period dropped by 42 per cent to $110 billion. Exporters, however, are not happy with their performance and want the Government to sort out the liquidity problem being faced by them.

According to M. Rafeeque Ahmed, President, FIEO, a lot of refund money, such as duty drawback, excise rebate and VAT, is pending from the Government and this is blunting competitiveness.

The economic situation in the US and the Euro Zone is not very favourable for exports, said Sanjay Budhia, Chairman, CII Export Committee.

(This article was published on January 10, 2014)
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