Indicating a pick-up in economic activity, imports went up for the first time since February, rising 7.6% to $42.6 billion in December, while exports were 0.8% lower at $26.9 billion on account of lower shipment of oil products to the UAE and parts of Europe. As a result, trade deficit widened to $15.7 billion, the highest since January 2020, according to preliminary numbers released by the commerce department on Saturday.
Drugs and pharmaceuticals, chemicals, electronic goods and iron ore were among sectors that reported double-digit export growth, with the fall in oil prices resulting in a steep 40% decline in the value of petrol and diesel shipped out of the country to $2.2 billion in December. Although countries like Singapore have stepped up purchase of fuel from India, large buyers such as the UAE have slashed imports by nearly 50%.
Large buyers like the UAE have slashed imports of oil by nearly 50%, pushing down overall exports of petrol and diesel from the country. At the same time, among the major export items, there were nascent signs of recovery in case of gems and jewellery (6.7%) and engineering goods (0.1%), although readymade garments languished, falling 15% in December as large parts of the globe continued to work from home. The numbers indicated that non-oil exports had witnessed a 5.3% to $24.7 billion.
Exporters appeared positive, especially with vaccination against Covid-19 starting in many parts of the world, including the US and the UK. “The New Year has brought a ray of hope and optimism for all from the worst of Covid-19 and vaccines are expected to bring both life and economy back on growth trajectory with a V-shaped recovery in world trade. Arrival of vaccines have also helped in boosting the business sentiments for the sector as a whole, which can be seen from the positive figures of the upcoming months,” said SK Saraf, president of Federation of Indian Export Organisations, a lobby group.
At the same time, many exporters suggested that there is a need to watch the numbers in coming months. “While domestic economy is showing sure signs of bounce back, there is still a rough sail for exports in global market. This is despite roll out of vaccine in several parts of the world,” said EEPC India chairman Mahesh Desai.
