HOME > BUSINESS > India’s exports, imports starting to pick up pace – Crisil Research

India’s exports, imports starting to pick up pace – Crisil Research

India’s exports and imports are both starting to show a pick up as economic conditions improve, Crisil Research said.

The research agency’s comments came after data for August showed that India’s trade deficit fell to 4-month low of $10.8 billion due to a 15% y-o-y decline in oil imports.

Lower oil imports were driven by both a $10/barrel decline in crude oil prices compared to a year ago as well as lower import volumes. Excluding oil, imports in fact grew by nearly 14% in August.

“Despite the recent slowdown, we believe that export growth this year will pick-up as economic recovery in the US gains momentum,” Crisil Research said.

crisil-trade-deficit

India exports around 12.5% of its merchandise exports and 60% of its IT/ITES exports to the US.

“While exports grow faster, imports of oil, consumption and investment goods are also likely to rise with recovery in GDP growth. Signs of this are already visible in the monthly trade data with growth in non-oil non-gold imports turning positive since May 2014,” it added.

India has an annual target of around $120 billion of trade deficit. Any higher, and the it becomes a problem for India’s government to manage fund flows to and from the country.

India recently removed tight restrictions on the import of gold, one of the key factors leading to high deficits.

The low base benefitting gold imports wore off in August as the decline in gold imports began exactly a year ago as a result of import restrictions. Mirroring domestic economic recovery, core (non-oil non-gold) imports also trended upwards for the fourth consecutive month – and much more sharply this time – growing at 8.2% y-o-y in August, up from 2.8% y-o-y in July, Crisil pointed out.

Exports however, grew by only 2.4% y-o-y in August, a sharp slowdown from the average 10% growth witnessed in the last 3 months. “With core imports expected to pick up going ahead, the growth momentum in exports needs to rise in coming months to keep the merchandise trade deficit in check,” it added.

Imports rose by just 2.1% y-o-y in August down from 4.3% y-o-y growth seen in July. The decline was entirely led by falling oil imports. Non-oil imports grew by 13.8% y-o-y in August led by both higher gold and well as higher core (non-oil non-gold) imports.

Gold imports in August stood at $2 bn as compared to $0.7 bn in August last year when the import restrictions were first put in place, leading to a sharp reduction in gold imports. Although the RBI has partially relaxed some gold import restrictions, fortunately this has not led to a significant rise in gold imports. Since May-end ‘star trading houses’ have been allowed to resume importing gold and banks have once again been permitted offer gold metal loans to jewellery manufacturers.

“Core or non-oil non-gold imports, an indicator of domestic demand in the economy, continued to grow for the fourth consecutive month in August, signalling a nascent recovery in domestic demand. Prior to that, non-oil non gold imports had been falling every month since August 2013,” Crisil said.

The slowdown in exports was driven by a sharp decline in exports of petroleum products (12.9% y-o-y fall), gems & jewellery (10.3% y-o-y fall) and electronic goods (17.7% y-o-y fall). India imports crude, refines it and re-exports the products. The three sectors together account for nearly 40% of India’s merchandise exports. In contrast, exports of ready-made garments, leather products and marine products continued to show robust growth in August.

Follow ULTRA.news
GST complaints coming mainly from tax-evaders – Adi Godrej Adi Godrej, chairman of one of India's largest manufacturing and real estate groups, said most of the complaints about the new Goods and Services Tax is coming from businesses that have been built on a model of tax evasion."The complaints about the GST are mainly coming from ...
NRI bank accounts see mega outflows as Gulf crisis hits earnings Net bank deposits by non-resident Indians have fallen by nearly 90% so far this financial year as more and more foreign workers dipped into their bank accounts in the face of a crisis in the Gulf region, industry association ASSOCHAM said.Net bank deposits -- the difference ...
India to announce new industrial policy in October The Indian government is likely to announce a new industrial policy in October, the ministry of commerce and industry said, and sought feedback from the public.Commerce and industry minister Nirmala Seetharaman will hold a final round of consultations with stakeholders soon,...
Modi’s reforms drag, power plants to face low loads, study India’s energy sector is facing low capacity utilisation in power generation as plant load factor is estimated to remain low at around 62 per cent until 2018-19, noted a recent ASSOCHAM-Crisil joint study.The study also expressed concern over the slow pace of reform implement...
Expecting waivers, farmers stop paying back bank loans? The write-off of farm loans in Uttar Pradesh and Maharashtra seems to be encouraging farmers in other states to stop paying back their farm loans to make sure that they will get the benefits of any farm loan waiver program in their state. This has led to a sharp increase in farm ...
IT companies using illegal tactics to force workers to resign: FITE The Forum for IT Employees, arguably the IT workers rights organization with the largest number of well-wishers and supporters, accused IT companies of using illegal and unethical means to force their workers to submit their resignations.In a meeting with Maharashtra Chief Mi...
Demonetization took India forward by 3 years – SBI The demonetization of currency notes late last year has doubled the number of card transactions and helped push India's payment digitisation by three years, State Bank of India said in a note."Even after seven months post demonetization, the transaction value is quite large ...
India’s trade gap doubles in May as exports grow fast India's merchandise imports continued to grow at a blazing pace, widening the gap between the foreign exchange that the country earns from its exports and the money that it has to shell out for its imports.Imports for May rose by 33% compared to a year ago, resulting in a do...
Indian IT industry facing layoffs as conditions worsen, warns Assocham Trump unveiled his 'Buy American, Hire American' program yesterdayIndian IT companies are bound to see "some laying off" of their work force back home due to various negative forces impacting the industry, Assocham -- an association of various industries -- warned."With ...
Rs 1.7 lakh cr deposited via demonetization may not be withdrawn – SBI Monthly cash withdrawals for all banks | source:SBI ResearchThe Indian banking system is likely to get a permanent liquidity boost of Rs 1.7 lakh cr due to the demonetization of high-denomination bank notes, State Bank of India chief economic adviser said in a note to bank c...
After missing twice, India comfortably meets power sector targets for 12th five-year plan After missing its targets by wide margins in the previous two five-year plans, India is all set to comfortably meet or exceed all its power sector targets for the 12th five-year plan that ends this month.Five-year plans, borrowed from the Soviet Union, are a legacy of Nehruvi...
Wholesale price inflation hits 3-year high on high diesel prices High fuel prices, particularly that of diesel, lifted India's wholesale price index to its highest level since the Narendra Modi government took power almost three years ago.On an overall level, wholesale price of various items jumped 6.55% in February when compared with ...
No immediate plans for universal basic income: Indian Government India's welfare budget, 2016-17The Indian government has no immediate plans or proposals to institute a scheme of 'unversal basic income' in place of the myriad social welfare scheme run by the country at present, the finance ministry said in response to a query.The clar...
Gadkari to miss ambitious highway target for 2016-17 Nitin Gadkari, who is slowly building up a reputation as a pragmatic and capable minister, is likely to face major disappointment in the ongoing financial year as his ministry is unlikely to meet the steep road construction target it set for itself.Unlike the term of the ...
DEMONETIZATION: SBI sees GDP growth fall to 6.1%, miss govt projection of 7% The country's largest bank, State Bank of India, said today that it expects the growth in India's gross domestic product to fall to 6.1% or lower in the current year from 7.9% last year due to the impact of demonetization.It said the projection by government of India's Centra...
Demonetization: Modi announces bumper prizes; 15 lakh users to get 1,000 rupees Narendra Modi announced several 'prize schemes' to promote cashless transactions.Under the schemes announced today, there will be two sets of prizes for consumers and another for small merchants.Under the first scheme, any customer who uses any electronic form of payment,...
DEMONETIZATION: Wholesale Price Inflation falls to 3.15% in November The annual rate of inflation, based on monthly WPI, stood at 3.15% for the month of November, 2016 as compared to 3.39% for the previous month and -2.04% during the corresponding month of the previous year.The fall is largely expected due to the impact of the withdrawal of h...
Industry welcomes move to include made-ups in apparel package SIMA has welcomed the move include made-ups in the apparel packageThe industry has welcomed the move by the government led by Narendra Modi to extend support to the made-ups export industry and said it would help the sector break out of its current slump.The cabinet had ...
Petrol Pumps, Airlines Will Not Take Old Notes From Saturday | DEMONETIZATION Old notes will no longer be accepted at petrol pumps and airline ticket counters starting from Saturday, according to sources.So far, petrol pumps and airlines had been given an exemption from demonetization of 500 and 1000 rupee notes.However, in an effort to control...
Fitch revises US growth estimates on Trump election, says protectionism to rise The surge in populism and anti-establishment sentiment witnessed in the Brexit vote and Donald Trump's victory in the US presidential election seem likely to push structural policies in the direction of economic nationalism, said Fitch Ratings in its latest global economic outloo...