Trade deficit at 11-mth low on oil plunge - Times of India

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NEW DELHI: India's exports contracted over 11% to $23.9 billion in January, the sharpest decline in two-and-a-half years, due to a fall in international oil prices but a sharper fall in imports, again due to crude, meant that the trade deficit narrowed to an 11-month low of $8.3 billion.

Lower international prices of petroleum products meant that exports almost halved to $2.3 billion in January 2014, compared to over $4.6 billion a year ago. At the same time, data released by the commerce department showed imports fell 11.4% to $32.2 billion during January as oil imports shrank over 37% to $8.2 billion on account of lower crude prices. Non-oil imports were, however, 3.5% higher at close to $24 billion. Gold imports in January grew 8% to $1.5 billion.

Apart from oil products, among the more prominent items in India's export basket, gems and jewellery were down nearly 4% due to a protracted slowdown in Europe, along with chemicals (around 11%) and cotton yarn and fabrics (9%).

The decline in exports ahead of the Budget is expected to result in fresh calls for sops in the wake of low demand in Europe, a key market for Indian textiles, gems and jewellery and other exports. This was the second straight month of fall in exports and is the steepest drop since the 14.8% decline in July 2012.

The finance ministry has held back fresh benefits for exporters so far this fiscal due to paucity of funds. Commerce & industry minister Nirmala Sitharaman has failed to even announce the five-year Foreign Trade Policy, which was due last April, as North Block refused to play ball with her strategy.