Petroleum products, textiles and chemicals lead export surge

In another green shoot indicative of the economy regaining some strength, the country’s export increased by double-digits for the fourth month in succession, in October, and the 13.7 per cent y-o-y rise during the month was the sharpest over the past 24-months period, which had seen a steady erosion in the pace with around half of the months recording annual decline. Import continued to sag for the fourth month due to shrinkage in gold import following RBI curbs, increasing rupee cost thanks to rupee depreciation and a subdued economy. At $10.5 billion, trade deficit for the month was half the level a year ago.

Over the April-October period, total export increased by 6.3 per cent to $179 billion, whereas total import declined 3.8 per cent to $270 billion. Apparently, the recent rupee depreciation has helped exports, even as following the continued slack in the economy and increasing rupee cost, imports have eroded. Trade deficit was assessed at $91 billion, showing a sharp reduction from $112 billion in the corresponding period of 2012-13. Petroleum crude oil import increased by 3.3 per cent to $98 billion due to stickiness in its import volume, even as non-oil import, largely industrial and other imports like gold, declined 7.4 per cent to $172 billion.

According to reports, import of gold and silver declined by 13 per cent during the period, mainly due to various curbs imposed by RBI. The improved merchandise trade deficit in particularly Q2 has helped ease concerns on possibility of a sharp escalation in current account deficit.

Petroleum export shoots up
Petroleum product export has shot up 16 per cent to $32 billion annually during April-September for which details are available, accounting for around two-thirds of the increase in total export over the period. In fact, the growth rate of 25 per cent in petroleum product export during July-September was nearly four times 6.9 per cent during Q1. Textile export which had gone up 9 per cent in Q1 doubled the pace to 17 per cent. Cumulatively, export increased 13 per cent to $14 billion over H1. Engineering goods staged a turnaround from 7 per cent decline in Q1 to over 9 per cent increase in Q2. Cumulatively, engineering goods export showed one per cent increase to $28 billion. Likewise, chemical & chemical product export also doubled the pace to 8 per cent in Q2 with their total export showing 6 per cent increase to $21 billion over H1. Apparently falling rupee has helped these sectors regain some of their vigour.

However, gems & jewellery export eroded 7 per cent to $21 billion over H1. By the way, pearls & precious, semi-precious stone import, the raw material base in import-intensive gems & jewellery export escalated 19 per cent to $12 billion, even as the rate of increase dropped from 31 per cent in Q1 to 6 per cent in Q2. Among the other imports, machinery and project goods import declined by 17 per cent to $23 billion, with Q1 and Q2 sharing the decline. Apart from dissuasion due to costlier dollar, insipid project execution also played a part in this downturn.

Among the other imports, bulk import declined nominally to $109 billion; in this petroleum crude, the main import item, increased by around 4 per cent, whereas other bulk imports like fertilizers, edible oil, metals etc. declined by around 10 per cent.