New Delhi: India's trade deficit jumped to three years high of $14 billion in October which may further widen current account deficit.
Export declined by 1.12 per cent to $23 billion in October, retreating from a six-month high growth in September as shipments of textiles, pharmaceuticals, leather and gems and jewellery fell. Imports grew by 7.6 per cent to $ 37.11 billion in October from $ 34.5 billion in the year-ago month. Trade deficit was at $8.98 billion in the previous month.
Federation of Indian Export Organisations (FIEO), president, Ganesh Kumar Gupta said that the fall was expected as exporters particularly MSME 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.
“Implementation of the measures approved by GST Council is not taking place as a result challenges faced by the exporters remain the same,” added FIEO chief.
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. The decline in these highly employment-intensive sectors is a worrisome sign, said Mr Gupta.
He noted that WTO’s latest World Trade Outlook Indicator (WTO) also suggests that global merchandise trade growth will likely moderate in the fourth quarter of 2017.
FIEO president further added that exports should be out rightly kept out of the purview of GST as paying the tax first and getting refund is cumbersome, complex and complicated affecting exports. As per data, gold imports dipped by 16 per cent to $2.94 billion last month.
Oil and non-oil imports grew by 27.89 per cent and 2.19 per cent to $9.28 billion and $27.83 billion, respectively in October. In October, petroleum, engineering and chemicals exports grew by 14.74 per cent, 11.77 per cent and 22.29 per cent, respectively.
Rating agency Icra’s principal, economist Aditi Nayar said that it is estimate every $1 increase in the price of the Indian crude oil basket would bloat annual net oil imports and the current account deficit by $1.2 billion. “The sharp merchandise trade deficit for October 2017 and the rise in crude oil and other commodity prices portend a sequential uptick in the current account deficit for Q3 FY2018, despite the expectation of subdued gold imports,” she said.
