Merchandise exports contracted a steep 21.06 per cent in March, the most in 67 months. This pulled down overall exports in 2014-15 by 1.23 per cent, the second decline in three years, as petroleum prices softened and demand abroad remained lacklustre. In the second half of 2014-15, exports fell every month except in November. For March, exports stood at $23.95 billion, against $30.34 billion a year earlier, showed official figures released on Friday. Before this, the steepest fall was in August 2009-10, when exports had contracted 23.59 per cent. For 2014-15, merchandise exports declined to $310.53 billion from $314.41 billion in 2013-14. The government had set a target of $340 billion for 2014-15, 8.7 per cent higher than the actual figure. “Though exports have contracted for a whole year earlier, the fall in 2014-15 is the biggest in terms of the target set by the government,” said Soumya Kanti Ghosh, chief economic advisor, State Bank of India. According to data released by the Ministry of Commerce and Industry, imports fell 13.44 per cent to $35.74 billion in March this year from $41.29 billion in March 2014. For 2014-15, overall imports contracted 0.59 per cent to $447.54 billion from $450.21 billion in 2013-14. Still, gold imports surged 93.86 per cent to $4.98 billion. A YES Bank analysis attributed this to stocking for the coming festive season, especially ‘Akshaya Tritiya’ on April 21. In March, gold prices fell 3.8 per cent month-on-month. Silver imports rose 193.73 per cent in March. The trade deficit widened to a four-month high of $11.79 billion in March from $6.85 billion in February and $10.95 billion in March last year. This might have some impact on the country’s current account deficit for the March quarter. For 2014-15, the deficit increased to $137.01 billion from $135.8 billion in 2013-14. Aditi Nayar, senior economist, ICRA, said the trade deficit widened on account of a sharper-than-anticipated and fairly broad-based contraction in merchandise exports. “While we expect stable commodity prices to restrict the current account deficit at less than one per cent of gross domestic product in FY16, the weak export momentum remains a concern, as it might cast a pall over the economic recovery, especially considering the less-than-robust outlook for domestic demand,” she said.

In March, oil imports stood at $7.41 billion, down 52.68 per cent from $15.66 billion in March last year. Non-oil imports rose 10.55 per cent to $28.33 billion from $25.62 billion a year earlier. Cumulatively, oil imports declined 16.09 per cent to $138.26 billion in 2014-15, compared with $164.77 billion in 2013-14. In March, exports plummeted mainly due to a steep 59.58 per cent fall in petroleum product exports at $2.36 billion, compared with $5.84 billion in March 2014. Export by other sectors that constitute 68 per cent of India’s total export basket, such as engineering goods, electronic goods, gems and jewellery and chemicals also fared poorly in March, falling 2.55 per cent, 20.25 per cent, 8.36 per cent and 5.36 per cent, respectively. “This is disappointing. Sectors that contribute the most to the country’s total export basket have been falling consistently since the past three months,” said Ajay Sahai, chief executive and director general of the Federation of Indian Export Organisations. He added the weak global trade outlook notwithstanding, there was an inherent problem in India’s export composition. “India is at the lower end of the export category, which is why our exports are adversely hit by a crash in inputs prices,” Sahai said. Earlier this month, the government had released the Foreign Trade Policy (FTP) for 2015-2020, offering a slew of incentives under two broad schemes — Merchandise Export from Indian Scheme and Services Export from India Scheme. It had set a target of $900 billion of goods and services export. According to YES Bank, the new FTP will provide continuity and stability to Indian exports, as a review will be carried out after every two and a half years. The contraction in India’s exports in 2014-15 is the third in the past six years. In 2012-13, exports had fallen 1.85 per cent to $300 billion from $306 billion in 2011-12. In 2009-10, exports fell 3.4 per cent year-on-year.