India's trade deficit narrows to $9.8 billion in January
Merchandise exports grew 4.32% to $22.12 billion last month, while imports rose 10.7% to $31.96 billion. Photograph: (Reuters)
India's goods exports rose in January for the fifth straight month on the back of stronger commodity prices, despite growing protectionist and anti-trade sentiment in the United States and Europe.
The monthly trade deficit narrowed slightly to $9.8 billion.
Merchandise exports grew 4.32 per cent year-on-year to $22.12 billion, while imports rose 10.7 per cent to $31.96 billion, the Ministry of Commerce and Industry said in a statement.
Oil prices - up nearly 18 per cent since the end of November - forced up the bill for crude oil, India`s largest import item, by 61.1 per cent to $8.1 billion, threatening to reverse recent declines in inflation.
Countering that, oil exports also rose, by 29 per cent to $2.7 billion, as some crude oil is processed and re-exported by Indian oil refiners such as Reliance Industries.
The trade deficit fell nearly $20 billion in 2015/16 as the cost of oil imports halved thanks to a slide in prices, a trade windfall to Prime Minister Narendra Modi's government.
Merchandise exports account for just 1.6 per cent of global trade, compared with nearly 14 per cent for China. Modi wants to lift India's share to 5 per cent by 2020.
His ambitions, however, face headwinds from rising anti-trade sentiment worldwide.
US President Donald Trump's "America First" trade policy as well as Britain's surprise vote last year to leave the European Union have clouded the global trade outlook.
With elections due in a number of major euro zone countries this year, very few see a let up in protectionist rhetoric.
"India is likely to face continued headwinds on the exports front due to the play out of Brexit and the anti-globalisation stance of US President Donald Trump," Fitch subsidiary India Ratings` economist Sunil Kumar Sinha said.
India`s Finance Minister Arun Jaitley has warned that a popular backlash against globalisation is a major risk for the nascent recovery in Indian exports.
A particular worry is Trump's immigration policies, which could cast a shadow on the fortunes of India's $146 billion IT services industry in its biggest market.
Underscoring the challenge, net services exports between April and December fell to $48.3 billion from $53.6 billion a year ago.