New Delhi: India’s trade deficit narrowed to a record low as merchandise imports contracted faster than merchandise exports in March amid tepid global demand and a volatile global currency market.
Data released by the commerce ministry showed while merchandise exports contracted 5.47%, merchandise imports shrank 21.56% leading to a trade deficit of $5 billion in March.
With the March figure, merchandise exports thus fell 15.9% to $261.1 billion in 2015-16 while merchandise imports contracted 15.3% to $379.6 billion, leaving a trade deficit of $118.5 billion during the year.
Professional Forecasters’ projection by the Reserve Bank of India (RBI) earlier this month said India merchandise exports and imports are expected to grow 1.7% and 4.4%, respectively in 2016-17.
India’s share in world exports has declined from its recent peak of 1.7% in 2014 to 1.6% even as some major advanced economies and peer Emerging Market and Developing Economies (EMDEs) have gained share. “This suggests that factors such as the rising incidence of protectionism and competitive depreciation might have affected export performance, since depressed global demand is common to all exporting countries,” RBI said in its monetary policy statement on 5 April.
The World Trade Organization (WTO) has projected growth in the volume of world trade to remain sluggish in 2016 at 2.8%, same as 2015. While imports of developed countries are estimated to moderate this year, demand for imported goods in developing Asian economies are expected to pick up.