NEW DELHI: India's trade deficit for the month of August narrowed to $10.9 billion, versus $12.26 billion in July. The deficit narrowed on the back of improving exports and declining imports, and was down 11% month-on-month.
While exports stood at $26.14 billion in the month of August as against $25.83 billion in July (up 1.2% month-on-month), the imports came in at $37.05 billion versus $38.10 billion in July. Imports saw a decline of 2.7% month-on-month.
Imports for FY14 till August were reported at $197.8 billion, a rise of 1.7% year-on-year. Exports on the other hand grew 3.9% YoY, and stood at $124.43 billion in the period April-August.
Gold imports declined significantly to $0.65 billion versus $2.2 billion month-on-month. Commenting on the same Trade Minister Anand Sharma said, “Gold imports have come down.” “Gold imports are coming down consistently, fall will not impact jewellery sector” he added.
Sharma said that the government is trying to close the big gap between imports and exports. “Exports are on a firm, positive terrain now. I remain optimistic about exports being in positive territory,” he said.
However, Sharma said that rupee depreciation might not be the reason behind a boost in exports. “45% of exports have imported contents. I don't think weak rupee has any impact on positive export results,” he said.
Sharma said exports are picking up because demand is improving in both traditional and new markets. He said measures to promote exports are bearing fruit and hoped the good monsoon would help economic growth this year.
The Minister also said Russia has lifted a ban on import of non-Basmati rice from India. Export growth had touched a two-year high of 11.64 per cent in July.
Imports of gold and crude oil have fuelled India's trade deficit, which has contributed to the widening current account deficit (CAD). The CAD touched an all-time high of 4.8 per cent of gross domestic product, or $88.2 billion, in 2012-13.
Last week, stating that a long-term stability in rupee can be driven only be a lower Current Account Deficit (CAD), Bank of America Merrill Lynch (BofA-ML) in its latest report has said that it sees a likely up tick in India's exports.
In the bank's report Jyotivardhan Jaipuria, Research Analyst, DSP Merrill Lynch ( India) has cited three reasons; revival of US demand, rupee depreciation helps competitiveness and accidents and more stringent safety measures in Bangladesh - as the key factors that will drive exports up.
