Skip to main content

Exports jumps 30%, trade defict high at Rs 13.8 bn

Exports jumps 30%, trade defict high at Rs 13.8 bn
Non oil ,non gold imports up 23%,showing signs of industrail recovery
The GST Council´s efforts to resolve exporters´ woes on refunds seem to have started yielding results.Exports grew 30.55 per cent in November,amonth after it contracted 1.1 per cent, also due to the low base effect and rising petroleum prices.
In fact, petroleum products, along with engineering goods, gems and jewellery, and chemicals, drove nearly 80 per cent of the rise in merchandise exports.The outbound shipment stood at Rs  26.19 billion in November against Rs 20.06 billion a year ago. To put things in context, exports had declined by 24.43 per cent in November 2016, the steepest that year.
Exports rose 12.01 per cent at Rs 196.48 billion during the first 11 months of the current financial year.But exporters complained that their funds were still stuck and demanded government intervention to address their concerns including issues related to the goods and services tax (GST).
In November, imports were also up by a three month high of 19.6 per cent to touch Rs 40.02 billion.This was attributed mostly to around 40 per cent surge in oil imports.As a result, the trade deficit was pegged at Rs 13.82 billion in November, slightly lower than the 35month high of Rs 14 billion in the previous month.
This may pressure current account deficit (CAD), which includes balance in services as well. The CAD stood at 1.2 per cent of GDP in the second quarter, lower than 2.4 per cent in Q1.Nonoil, nongold imports, taken as an indicator of industrial health, increased by 22.6 per cent at Rs 27.21 billion in November.
Growth was significantly high compared to 4.9 per cent in October, as well as also against almost 20 per cent in August and September each.This meant industrial recovery may be round the corner.The index of industrial production (IIP) growth slowed to 2.2 per cent in October from 4.14 per cent in September.
However, the recovery may not be across the board as import of project goods declined 48.5 per cent in November.Aditi Nayar of ICRA said while the high growth in exports in November came as a relief following the contraction in the previous month, it partly reflects higher commodity prices as well as a favourable base effect.
Among the major contributors, export of petroleum products rose 47.6 per cent, those of chemicals by 47.9 per cent and engineering 43.7 per cent.Gems and jewellery exports rose 32.6 per cent despite gold imports declining by almost 29 per cent. However, exports of fruits and vegetables, ready made garments of all textiles, jute manufacturing including floor covering and carpet declined.
Exporters said this should be analysed to address the pain points, especially as these sectors are highly employment intrinsic.President of exporters´ body FIEO Ganesh Kumar Gupta attributed the growth in exports to a significant recovery in global demand."The positive growth in exports in November has been witnessed by China, South Korea, Taiwan, Singapore, reflecting recovery in global demand, though India has emerged as a top performer," he said.
Earlier this month, the government had announceda Rs 8,450 crore annual increase in incentives to the labour intensive and employment oriented exports in the mid term review of the foreign trade policy.This financial year (FY18), it will be an additional incentive of Rs 2,816 crore.
This will benefit leather, handicraft, carpets, sports goods, agriculture, marine, electronic components, and project exports in merchandise, and legal, accounting, architecture, and education in services.The government should also gradually extend these benefits to other sectors of exports since they are also facing numerous challenges in exports, the FIEO president said.
Gupta exuded confidence that the problems in GST refund would also be mitigated in the days to come to ease the liquidity issues for exporters.He highlighted embedded taxes on exports, GST on sea and air freight for exports, seamless timely refund among the issues that the government should focus on, while managing high volatility in exchange rate.
The Business Standard, New Delhi, 15th December 2017

Comments

Popular posts from this blog

RBI minutes show MPC members flagged upside risks to inflation

RBI minutes show MPC members flagged upside risks to inflation Concerns about economic growth and easing inflation prompted five of the six monetary policy committee (MPC) members to call for a cut in the repo rate, but most warned that prices could start accelerating, show the minutes of the panel’s last meeting, released on Wednesday. The comments reflected a tone of caution and flagged upside risks to inflation from farm loan waivers, rise in food prices, especially vegetables, price revisions withheld ahead of the goods and services tax, implementation of house rent allowance under the 7th pay commission and fading of favourable base effect, among others. On 2 August, the panel chose to cut the repurchase rate—the rate at which the central bank infuses liquidity in the banking system—by 25 basis points to 6%. One basis point is one-hundredth of a percentage point. Pami Dua, professor at the Delhi School of Economics, wrote that her analysis showed “a fading economic growth outlook, as …

Shrinking footprints of foreign banks in India

Shrinking footprints of foreign banks in India Foreign banks are increasingly shrinking their presence in India and are also becoming more conservative than private and public sector counterparts. While many of them have sold some of their businesses in India as part of their global strategy, some are trying to keep their core expertise intact. Others are branching out to newer areas to continue business momentum.For example, HSBC and Barclays Bank in India have got out of the retail business, whereas corporate-focused Standard Chartered Bank is now trying to increase its focus on retail “Building a retail franchise is a huge exercise and takes a long time. You cannot afford to lose it,” said Shashank Joshi, Bank of Tokyo-Mitsubishi UFJ’s India head.According to the Reserve Bank of India (RBI) data, foreign banks’ combined loan book shrunk nearly 10 per cent from Rs 3.78 trillion in fiscal 2015-16 to Rs 3.42 trillion last financial year. The banking industry, which includes foreign banks…

Differential Tax Levy under GST: Food Firms May De-Register Trademarks

Differential Tax Levy under GST:Food Firms May De-Register Trademarks The government’s decision to charge an enhanced tax rate on trademark food brands is leading several rice, wheat and cereal manufacturers to consider de-registering their product trademarks. Irked by the June 28 central government notification fixing a 5 per cent goods and services tax (GST) rate on food items packaged in unit containers and bearing registered brand names, the industry has made several representations to the government to reconsider the differential tax levy, which these players say is creating an unlevel playing field within these highly-competitive and low-margin industries. Sources say that the move has affected the packaged rice industry the hardest and allowed the un-registered market leaders, India Gate and Daawat, to gain advantage as compared to other registered brands such as Kohinoor and Lal Qilla. Smaller players are even more worried with this enhanced rate of tax (against the otherwise …