December 2013 Trade Deficit Dropped By 40% On YoY Basis

The trade deficit data for the December 2013, dropped down to USD 10.14 billion (Rs 62900 crore) from USD 17 billion (Rs 105400 crore) a year ago despite of the lower growth in exports. The exports increased by 3.5% to USD 26.35 billion.

The drop in trade deficit is driven by the decline in imports which fell by 15.25% on YoY basis, which were valued at USD 36.49 billion. The imports constituted crude oil import of USD 13.9 billion, which increased by 1.1% during the month as compared to a year ago. While in Rupee term the export increased by 17% to Rs 163129 crore and the import dropped by 3.98% to Rs 225887 crore.

The non-oil import for the same period stood at USD 22.59 billion. Further, the gold and silver imports were reported at USD 1.77 billion in December 2013 against USD 5.6 billion reported in the year 2012-2013. The government has taken steps to cut down imports of non-essential commodities, particularly the precious metals like gold and silver, which includes hike of import duty to 10%.

In the last fiscal, the export has been hurt due to the slowdown in India's key markets such as the United States of America and the European Union. However, in the current fiscal, the marginal growth in these markets and the plans to diversify to the other new markets in Africa, Southeast Asia and Latin America has helped to improve the exports. So, the trend of decline in trade deficit from few months will help to tackle the problem of widening current account deficit (CAD) of India.