July exports rise for 11th straight month

Gold imports nearly double in first month after GST

Export growth slowed in July to 3.94 percent even as the country witnessed 11 straight months of rise in out bound trade. India exported $22.54 billion worth of goods in July, against $21.68 billion in the same month last year, according to the data issued by the commerce ministry on Monday.

Export growth slowed in July to 3.94 per cent even as the country witnessed 11 straight months of rise in outbound trade.

India exported $22.54 billion worth of goods in July, against $21.68 billion in the same month last year, according to data issued by the commerce ministry on Monday.

Growth has continuously declined since March, when it hit a high of 27 per cent, the steepest in a little over five years. In June, it was 4.39 per cent, down from 8 per cent in May. As a result, key export sectors have seen contraction or sluggish growth. The biggest hit was taken by the gems and jewellery sector, which saw a more than 22 per cent fall in July, compared to a 2.7 per cent fall in June. This happened even as July — the first month after the goods and services tax (GST) regime was introduced — saw gold imports rose by a massive 95 per cent to $ 2.1 billion.

The trend was similar to the previous month of June when inbound shipments of the yellow metal had risen by 102 per cent, providing much of the push to imports.

On this note, a sudden deluge of gold imports from free trade partner South Korea has alarmed New Delhi. Swinging into action, the government is examining several options, including levy of safeguard duty on gold imports from the nation to plug the route.

Of the total of 11,000 kg imported from July 1 to August 9, around 90 per cent has been brought in by two business groups which have taken advantage of the favourable reduction in tax incidence under the GST, routing their imports through Korea, say government sources.

Cumulative exports in the current financial year are $94.75 billion, an 8.91 per cent rise from the $87 billion exports in the same period last year.

Of the 30 most important export sectors, 11 posted declines. This was down from the previous month when the figure was 15.

Among major foreign exchange earners, engineering exports grew by more than 15 per cent, almost the same as the 14.8 per cent rise in the previous month. However, most other categories contracted.

“While engineering exports have been growing at a respectable pace, growth is due to pick up in base metals. But the rupee value is a cause of concern for exporters,” said T S Bhasin, chairman of the Engineering Exports Promotion Council of India.

The rupee has risen by 6.8 per cent against the dollar in 2017 to close at 64.10 on Monday. A stronger currency hurts exporters and makes imports, foreign travel and education cheaper. Economists have predicted a further strengthening of the rupee, but said it would help the economy.