Current account deficit narrows to 0.6% in Q4

NEWDELHI: India’s current account deficit narrowed to 0.6% of gross domestic product (GDP) in the fourth quarter of 2016-17 against 1.4% in the preceding quarter as trade deficit narrowed, according to data released by the Reserve Bank of India (RBI).

In the same quarter (JanuaryMarch) a year ago, India’s CAD stood at $300 million or 0.1% of GDP.

Separately, commerce ministry data showed India’s trade deficit expanded in May to $13.8 billion as exports growth decelerated to single digit (8.32% to $24 billion) after growing in double digits for three consecutive months while imports expanded 33.1% to $37.8 billion due to a significant jump in gold imports (236.7% to $5 billion).

Federation of Indian Export Organisations (FIEO) president Ganesh Kumar Gupta said the continuous growth in gold and electronics imports and the decline in pharma exports is a cause for concern which needs to be studied and addressed quickly.

On a cumulative basis, CAD narrowed to 0.7% of GDP in 2016-17 from 1.1% in 2015-16 due to contraction in the trade deficit to $112.4 billion in 2016-17 from $130.1 billion in 2015-16.

Aditi Nayar, principal economist at Icra Ltd, said she expects a widening of CAD to $27-32 billion, or 1.1% of GDP in FY18.

“Notably, volatility in commodity prices could significantly influence the pace of growth of import and export values.” NEW DELHI: US-based electric car major Tesla is in discussions with the Indian government seeking relief on import duties till a local factory is built here, according to the company’s chief executive Elon Musk.

Earlier this year, Musk had stated he was hoping for Tesla to enter India this summer with its products, which has so far not materialised.

“In discussion with the government of India requesting temporary relief on import penalties/restrictions until a local factory is built,” Musk said in a tweet. At present, India imposes 60% customs duty on import of completely built electric cars priced less than $40,000.

If the electric car is assembled in India, the customs duty on the completely knocked down units is 10%. If the value of the imported car is more than $40,000 the customs duty is 100%.

Replying to Musk’s tweet, Paytm founder Vijay Shekhar asked if there was an option to import some right-hand drive Model X in India. He indicated that he would pay full duties.

Last year in April, Tesla had stated that it planned to enter India with its Model 3 in 2017 while it began global roll-out of the vehicle in late 2016. Model 3 achieves 215 miles of range per charge while starting at $35,000 before incentives.