India’s trade deficit shrank to the lowest in 10 months in December as lower crude oil prices and falling gold demand reduced the burden on the import bill.
The gap between exports and imports stood at $13.08 billion, compared with $14.20 billion in the same month last year, according to a release from the Ministry of Commerce.
India's merchandise exports rose 0.3% to $ 27.93 billion in December 2018 over a year ago. Meanwhile, merchandise imports declined 2.4% to $ 41.01 billion.
Oil imports in December 2018 rose 3.16% to $10.67 billion. Global Brent price had decreased 12.07% in December compared with the corresponding period in 2017.
Gold imports declined 24.3% to $2.56 billion in December last year against $3.39 billion in the same month of 2017.
On exports front, the petroleum products recorded an increase in exports by 13.2% to $4.21 billion, followed by organic & inorganic chemicals 5.5% to $ 2.01 billion, RMG of all textiles 2.8% to $ 1.37 billion, electronic goods 50.8% to $ 0.83 billion and plastic & linoleum 20.2% to $0.75 billion. The exports also improved for rice by 1.3% to US$ 0.65 billion, mica, coal & other ores, minerals including processed minerals 7.4% to US$ 0.35 billion, ceramic products & glassware 43.3% to $0.27 billion and oil meals 35.8% to $0.19 billion in December 2018.
India’s overall exports in April-December 2018-19 are estimated at $396.73 billion, exhibiting a positive growth of 13.79% over the same period last year.
Overall imports in April-December 2018-19 are estimated at $479.46 billion, exhibiting a positive growth of 14.63% over the same period last year. The oil import bill during April-December 2018 was $108.10 billion - 42.85% higher than last year’s $75.67 billion.
“The 13.8% growth in overall exports is good news, of course. Falling crude prices, thanks largely to increased global production, will benefit the country, although there are fears that this spike in output could lead to a global glut,” said Pushkar Mukewar, Co-Founder and Co-CEO of Drip Capital, a US-based trade finance firm.
“Looking at non-petroleum products, the fall in coffee exports is not surprising, as it is in line with what coffee growers anticipated last year," he added.
In late September, the government hiked import duty on 19 items in an attempt to curb the fall in the rupee and bridge the widening current account deficit.