India Insight:India’s exports continue to fall

Trade deficit narrows further in August: Monthly trade deficit narrowedfurther to US$9.8bn (5.6% of GDP annualized) in October 2015 compared toUS$10.5bn registered in September 2015 as contraction in exports was morethan offset by weak imports. On a 3-month trailing basis, the trade deficitnarrowed to 6.2% of GDP annualised in Oct 2015 (vs 6.8% of GDPannualised in September 2015).

    Goods exports (in dollar terms) remained sluggish on continued declinein commodity exports: Goods exports continued to decline, down 17.5%YoY in October compared with the 24.3% YoY decline registered in Sep 2015.

    Looking at the break-down, bulk of the decline in exports during October wasdue to petroleum products (-57% YoY) and the rest due to other componentsincluding engineering goods (-12% YoY), gems & jewellery (-13% YoY), etc.

    Exports of food products including rice, marine products, oil meals and meat,dairy & poultry products also declined on subdued global food prices.

    Goods imports (in dollar terms) remained weak: Goods imports alsocontinued to decline, down 21.2% YoY (vs -25.4% YoY in September 2015).

    In terms of commodity composition, (a) oil imports remained sluggish,declining 45.3% YoY as global crude oil prices remained low; (b) gold imports,also slowed to US$1.7bn (-59%YoY) in October 2015; and (c) non-oil nongoldimport growth, an indicator of domestic demand, remained weak,declining 0.9% YoY (vs -5.5%YoY in September 2015) led by componentsincluding metaliferrous ores & other minerals, organic & inorganic chemicals,coal, coke & briquettes, etc, amongst others. However, some rebound wasseen in imports of electronic goods, transport equipments, pearls, precious &semi-precious stones and pulses.