Official data showed on Wednesday that exports fell 1.8% to 27.4 billion in December, while imports contracted for the seventh successive month. Imports fell by 8.8% at $38.6 billion in December 2019 which enabled narrowing of the trade deficit to $11.3 billion.
Exports have been under pressure due to a string of factors including the impact of the bruising global trade war between the US and China and the slowdown in key markets.
The pain was spread across sectors with 18 of the 30 crucial segments, contracting during the month. Experts have called for measures to boost exports and all eyes are now in the upcoming February budget for measures to accelerate shipments of goods from the country.
“The decline in the merchandise trade deficit in December 2019 relative to December 2018 was driven by the relatively broad-based contraction in imports, led by industrial inputs such as coal, chemicals, iron and steel, and non-ferrous metals, transport equipment, as well as consumer items such as precious and semi-precious stones,” said Aditi Nayar, principal economist at ratings agency ICRA.
“The moderation in the pace of contraction in merchandise imports to 8.8% in December 2019 from 12.7% in November 2019, was on account of oil imports (to -0.8% from -18.2%), driven by the YoY rise in the price of the Indian basket of crude oil. This trend is expected to sustain in January 2019,” said Nayar.
Exporters said they were awaiting a relief package in the February 1 budget. “Exports continue to be in a dismal state, as global slowdown has started biting even more severely. Rising domestic inflation is bringing additional pressure and affecting our global competitive strength. Exporters are now pinning hope on budget for fiscal relief and ease of doing business,” said Ravi Sehgal, chairman EEPC India.
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