India's export drops; trade deficit widens to $14 billion in October

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Exports following a growth of 7.89 percent increased to $1.9 billion in October 2017 from $1.8 billion in October 2016 while imports after a growth of 23.6 percent increased to $4.9 billion from $3.98 billion.

Goods imports last month were $ 37.12 billion, a gain of 7.6% from a year ago, data from the commerce and industry ministry showed. Trade deficit was at $8.98 billion in the previous month.

Exports during October 2017 were valued at U.S. $23,098.18 million as compared to $23,360.61 million during October 2016, registering a decline of 1.12%, according to data released by the Ministry of Commerce and Industry on Tuesday.

The fall, the first after 14 consecutive months of positive growth, was ascribed by exporters'organisations as being a direct fallout of the impact of the Goods and Services Tax (GST).

The trade deficit widened to nearly three-year high of United States dollars 14 billion during the last month as against USD 11.13 billion in October 2016 as imports surged.

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In October, petroleum, engineering and chemicals exports grew by 14.74 per cent, 11.77 per cent and 22.29 per cent, respectively.

Commenting on the export data, Ganesh Kumar Gupta, President, Federation of Indian Export Organisation (FIEO) said that the fall was expected as exporters, particularly, MSME (medium and small scale enterprises) were facing liquidity problem to pay GST for four months in a row without getting any refund. Gold imports dipped by 16 per cent to United States dollars 2.94 billion last month.

Gupta said that it was worrisome that labour-intensive sectors such as gems and jewellery, garments, handicrafts and leather products were the worst affected and the government needs to take remedial measures to prevent a further decline.

He suggested that exports should be out rightly kept out of the purview of GST as paying the tax first and getting refund is cumbersome, complex and complicated, affecting exports. Rising crude oil prices led to the oil import bill rising 27.9 per cent in the month, from an 18.5 per cent rise in September.

The trade deficit for October 2017 was estimated at $14,018.83 million as against the deficit of $11,134.48 million during the corresponding period in 2016, the ministry said.

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