After two months of double-digit growth, exports expanded at a slower 7.3 per cent to $ 27.7 billion in July, compared to $ 25.8 bn in the corresponding period of last year.
These had risen 10.2 per cent in June and 12.4 per cent in May. The growth declined in July mainly on account of a fall in shipments of electronic goods, gems and jewellery, and textiles, showed official data issued on Thursday.
Imports rose 4.3 per cent to $ 40 bn in July, compared to $ 38.3 bn in the corresponding month last year. As such, the trade deficit rose to a year’s high of $ 12.2 bn in July, against $ 11.8 bn in May. However, it was lower than the $ 12.5 bn in July 2013.
Imports were largely driven by petroleum and oil lubricants. Oil imports in July rose 12.8 per cent to $ 14.4 bn as against $ 12.7 bn a year before. Non-oil imports rose 0.03 per cent to $ 25.6 bn in July from $ 25.6 bn in the same month last year.
Import of gold fell 26.4 per cent to $ 1.8 bn, compared to $ 2.5 bn last year this month.
Non-oil and non-gold imports are considered a reflection of industrial activity. These together rose 2.9 per cent to $ 23.8 bn in July, year-on-year, after a 1.4 per cent rise in June. In June, industrial growth had fallen to 3.4 per cent, against five per cent in May.
During the month, exports of electronic goods, gems and jewellery, and cotton yarn fell 20.1 per cent, 17.4 per cent and 4.4 per cent, respectively. Shipments of rice in July fell 21.7 per cent. Earlier this week, the commerce and industry ministry had proposed relaxing the gold import duty.
On the other hand, export of petroleum products, marine products, engineering goods, organic chemicals, readymade garments, leather products and plastics had positive growth.
Refined petroleum products and engineering goods continued to drive exports, with the former again replacing the latter as the highest earner. Petroleum export rose 28 per cent to $ 7.2 bn in July, compared to $ 5.6 bn in the corresponding month of the previous year. Engineering goods rose 24 per cent to $ 5.8 bn against $ 4.7 bn earlier.
D K Joshi, chief economist with CRISIL, said exports would have a healthy run this financial year, due to early signals of economic recovery in America and Europe.
According to CRISIL, the US and European Union share in India’s exports are likely to rise, as incremental demand from these countries disproportionately benefits India’s direct export to them.
Total export during April-July grew 8.6 per cent to $ 107.8 bn over the $ 99.3 bn during the corresponding period of 2013-14. On the other hand, cumulative import reached $ 153.15 bn, down 3.8 per cent from $ 159.2 bn. The trade deficit declined to $ 45.3 bn in April-July, compared to $ 59.9 bn in the corresponding period last financial year. This will further depress the current account deficit, which has already been falling. Once a major problem, it had narrowed to $ 1.2 bn (0.2 per cent of gross domestic product) in the last quarter of 2013-14 against $ 18.1 bn (3.6 per cent of GDP) in the corresponding period last year. Total oil import in April-July reached $ 55.1 bn, up 6.7 per cent compared to $ 51.7 bn in the corresponding period of last year. Cumulatively, non-oil import contracted 8.8 per cent $ 98 bn from $ 107.5 bn.