In­dia's Feb trade deficit nar­rows to low­est since Sept 2013

The Pak Banker - - MARKETS/SPORTS -

In­dia's trade deficit nar­rowed in Fe­bru­ary to its low­est since Sept. 2013 as ex­ports con­tracted at a slower pace, with de­mand re­main­ing weak from Europe, the coun­try's big­gest mar­ket.

In­dia has been strug­gling with weak global de­mand al­though the blow has been soft­ened by a col­lapse in its oil im­port bill and curbs on gold im­ports.

Cheaper Chi­nese ex­ports have un­der­cut In­dia's en­gi­neer­ing ex­ports, which con­sti­tute around a quar­ter of to­tal goods ex­ports.

Prime Min­is­ter Naren­dra Modi's de­ci­sion to im­pose curbs and raise tax on steel im­ports to pro­tect do­mes­tic steel mak­ers has also had the ad­verse im­pact of rais­ing costs and sap­ping the abil­ity of In­dian pro­duc­ers of en­gi­neer­ing goods to com­pete.

Mer­chan­dise ex­ports, equiv­a­lent to about 15 per­cent of In­dia's $2 tril­lion econ­omy, con­tracted for the 15th straight month in Fe­bru­ary. They fell 5.66 per­cent from a year ear­lier to $20.74 bil­lion, data re­leased by Min­istry of Com­merce and In­dus­try on Tues­day showed.

Fe­bru­ary im­ports, fell 5.03 per­cent from a year ear­lier to $27.28 bil­lion, com­pared with $28.71 bil­lion in the pre­vi­ous month.

The trade deficit for Fe­bru­ary nar­rowed to $6.54 bil­lion, mainly due to soft de­mand for crude oil and fall­ing com­mod­ity prices, com­pared with $7.64 bil­lion a month ago.

Re­serve Bank of In­dia Gov­er­nor Raghu­ram Ra­jan has re­jected calls to de­value the cur­rency, say­ing last week that the cen­tral bank would not tar­get the ru­pee's ex­change rate and would only in­ter­vene to curb volatil­ity.

Ex­porters said the out­look re­mained bleak, mainly due to the global slow­down, and an­nual ex­ports could fall to near $260 bil­lion in the cur­rent fis­cal year, com­pared with $310 bil­lion in the pre­vi­ous year.

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