Exports Belie Slump Fears, Climb 26%
Trade deficit narrows to $9b as exports growth exceeds the 18.1% increase in imports; rise in commodity prices helped: Experts
New Delhi: India’s merchandise exports rose sharply in September, belying fears of a slump due to disruption and working capital issues brought on by the introduction of the goods and services tax.
Exports climbed 25.67% in September, exceeding an 18.1% increase in imports, helping narrow the trade deficit to $8.98 billion from $9.07 billion in September 2016.
In absolute terms, India’s exports were pegged at $28.6 billion in September against $22.8 billion a year ago, according to data released by the commerce department on Friday. Imports were up at $37.6 billion from $31.8 billion. “Continued improvement in the pace of growth of merchandise exports, as well as its fairly broadbased nature, suggest that concerns that arose after the transition to GST may be receding in some sectors,” said Aditi Nayar, principal economist at ICRA.
There were apprehensions that exports would take a hit because of GST, which was rolled out on July1, with refunds getting blocked. The government has already eased GST rules for exporters to reduce transition pains and speed up refunds.
“In continuation with positive growth exhibited by exports for the last 13 months, exports during September 2017 have shown growth of 25.67% in dollar terms,” the ministry said in a statement.
“We need to see if the trend continues for the next quarter and wheth- er this growth trend will be maintained... GST has not had much impact on the export numbers and going forward, with many gaps addressed by the government, the result should be positive,” said Ma- dan Sabnavis, chief economist at CARE Ratings.
In rupee terms, both exports and imports grew at a slower pace — 21.3% and14% respectively – from a year ago, showing the impact of the sharp appreciation of the rupee over this period.
The increase in exports was driven by a broad-based performance, with 26 of 30 categories posting positive growth. Outbound shipments of engineering goods grew 44.2%, chemicals (46%), petroleum products (39.7%), pharm (14.7%), readymade garments (29.4%) and gems and jewellery (7.1%).
“In our view, build-up of substantial stocks over the last few months would ease the volume of gold imports during the festive and wedding season,” said Nayar.
Higher exports will support India’s economy, which expanded 5.7% in the April-June quarter. Part of the increase in both exports and imports was because of the rise in commodity prices.