India's exports entered the negative zone after five months, contracting 2.15 per cent in September to USD 27.95 billion mainly due to the base impact even though trade deficit narrowed to a five-month low. According to the commerce ministry data, imports in September grew by 10.45 per cent to USD 41.9 billion as against USD 37.9 billion in September 2017.
The trade deficit, or the gap between imports and exports, stood at USD 13.98 billion in the last month. During April-August 2018-19, exports recorded a growth of 12.54 per cent. Imports during the period rose by 16.16 per cent, leaving a trade deficit of USD 94.32 billion in the first half of the current fiscal.
Exports were on the rise since April, after declining by 0.66 per cent in March 2018. Commenting on the data, Commerce Secretary Anup Wadhawan said that the decline is mainly on account of the base effect as exports showed an increase of 26 per cent in the year-ago month.
"This is a temporary kind of phenomena. In October, we will again see good growth in dollar terms," he told reporters here. Exports grew in a healthy manner in the first six months of this fiscal even in the difficult circumstances, he said adding the trend is expected to be maintained in the remaining half of the fiscal.
Federation of Indian Export Organisation (FIEO) President Ganesh Gupta said that the negative growth in September is primarily due to high base effect last year. The high growth witnessed in plastic and linoleum products, organic and inorganic chemicals, petroleum goods and pharma, are positive signs for future exports opined, Gupta said in a statement.
He added that the reduction in trade deficit would ease out concerns of current account deficit and may sombre the Rupee fluctuation to some extent. Gupta demanded augmentation of the flow of credit to the export sector, as a sharp decline in credit when exports are growing at the double-digit does not augur well for the future.
Talking about credit issue and GST refund, Wadhawan said exporters are happy for IGST refund as payments are roughly in time and there is no great pendency. "Input credit which is largely from the states, there is some delay and friction, which finance ministry is taking up with the states. We have written to them... We are hopeful that it will be resolved," the secretary said.
He said the government is taking steps to improve overall liquidity in banks and this intervention will ease the situation for exporters also. "We have requested for addressing export credit issue particularly and we are pursuing it with the finance ministry," he said adding the request of granting priority sector lending to exports "is under consideration of the finance ministry".
Further, he said that the challenges for exports include fragile global economic recovery. "There are threats to global recovery in terms of all these very confrontational trade stances that major countries have taken," he said. When asked about India's proposal to do trade in national currencies with some countries, he said, "Those channels are on and indications are positive as the whole idea is to have a better balance in our trade". India has proposed a trade in national currencies with countries like Russia, Iran and China.
On the issue of recent hike in import duties on certain items, he said, "we are doing everything within our bound rates". Further, when asked about the progress of talks with the US on trade issues, a ministry official said India is having regular discussions with American officials and "most things are resolved between us".
The government, for the second time, last month extended the deadline for the imposition of higher customs duties on 29 products, including almond, walnut and pulses, imported from the US, till November 2. The duty hike move by India was in retaliation to US President Donald Trump's March 9 decision to impose heavy tariffs on imported steel and aluminium items.
Senior officials of India and the US are in discussions to finalise a kind of trade deal. Both the sides holding two track discussions -- to increase trade in the short and medium term, and identify long-term trade potentials.