NEW DELHI: With the rupee continuing to weaken and Current Account Deficit (CAD) widening, India’s trade deficit expanded to a five-year high of $18.02 billion in July, mainly on account of a surge in oil import bills, the government said on Tuesday. June’s trade deficit had stood at $16.6 billion. In July, while oil imports surged 57.41 per cent to $12.35 billion, exports during the month were valued at $25.77 billion as compared to $22.54 billion during July 2017, growing at 14.32 per cent. The growth was mainly due to better performance from the gems and jewellery sector.
“Taking merchandise and services together, overall trade deficit for April-July 2018-19 is estimated at $43.77 billion against $34.07 billion during April-July 2017-18,” Commerce Ministry statement said.
FIEO president Ganesh Gupta on Tuesday reiterated concern on the rising trade deficit, which has added to inflationary conditions and the CAD, thereby adding to government’s woes on the fiscal deficit front. This is adding pressure on rupee, coupled with huge withdrawal by FIIs from the Indian debt & equity market.
“The rupee depreciation would definitely provide some edge to Indian exports as it is the worst performing currency in Asia this fiscal. Its impact will vary from sector to sector. However, the textile industry may be at a disadvantage with sharp depreciation in lira as Turkey is one of the competitors. Same is true for commodities as Argentinian and Brazilian currencies have depreciated at a steeper pace,” he said.