NEW DELHI: India’s trade deficit widened slightly in April to $13.72 billion mainly on account of rising oil imports, which experts feel may be a matter of concern in the coming months. Overall trade deficit for fiscal year 2017-18 has also soared to $156.8 billion compared to $105.72 billion in FY17.While goods (merchandise) imports last month stood at $39.6 billion, up by 4.6 per cent compared to same period last year, data from the commerce and industry ministry showed that merchandise exports for the month were only $25.9 billion. However, export growth has come in slightly stronger at 5.2 per cent compared to a year ago.
The primary components of the widening trade deficit were in the oil and gas sector. Oil imports during April were valued at $10.41 billion, nearly 41.5 per cent higher than that recorded for the same month last year ($7.36 billion). Non-oil imports, meanwhile, is estimated at $29.21 billion, down 4.30 per cent from last year.
The services sector however continues to record a significant trade surplus. While service exports during March, 2018, were valued at $16.83 billion with a positive growth of 7.16 per cent in dollar terms, it was offset by service imports of $10.28 billion during the month. Reacting to the data, FIEO president Ganesh Kumar Gupta said the trend in exports is not encouraging as all labour-intensive sectors including gems and jewellery, leather, textiles, jute, carpets, handicrafts and agri products are in the negative territory. “These sectors are still facing the problem of liquidity as banks and lending agencies have continuously been tightening their lending norms. The flow of GST refunds has also slowed down, which does not augur well for exports in the new fiscal,” Gupta said.
He also said that domestic issues including access to credit and cost of credit should be seriously looked into as global challenges rise amidst increasing protectionism. “The rising trade deficit, primarily on account of swelling of crude imports bill will further result in northward movement of prices, which may add to inflationary pressures,” Gupta added.