New Delhi - Export growth slowed in July to 3.94 per cent even as the Country witnessed 11 straight months of rise in outbound trade.
India exported $22.54 billion worth of goods in July against $21.68 billion in the same month last year, according to data issued by the Commerce Ministry.
Growth has continuously declined since March, when it hit a high of 27 per cent, the steepest in a little over five years. In June, it was 4.39 per cent, down from 8 per cent in May.
As a result, key export sectors have seen contraction or sluggish growth. The biggest hit was taken by the gems and jewellery sector, which saw a more than 22 per cent fall in July as compared to a 2.7 per cent fall in June. This happened even as July -- the first month after the goods and services tax regime was introduced -- saw gold imports rose by a massive 95 per cent to $ 2.1 billion.
The trend was similar to the previous month of June when inbound shipments of the yellow metal had risen by 102 per cent, providing much of the push to imports.
Cumulative exports in the current financial year are $94.75 billion, an 8.91 per cent rise from the $87 billion exports in the same period last year.
Of the 30 most important export sectors 11 posted declines. This was down from the previous month when the figure was 15.
Among major foreign exchange earners, engineering exports grew by more than 15 per cent, almost the same as the 14.8 per cent rise in the previous month. However, most other categories contracted.
“While engineering exports have been growing at a respectable pace, growth is due to pick up in base metals. But the rupee value is a cause of concern for exporters,” said TS Bhasin, Chairman of the Engineering Exports Promotion Council of India.
The rupee has risen by 6.8 per cent against the dollar in 2017 to close at 64.10 recently. A stronger currency hurts exporters and makes imports, foreign travel and education cheaper
Economists have predicted a further strengthening of the rupee, but some of them said it would help the economy. Apparel exports declined by more than 11 per cent in July against a 1.4 per cent contraction in June. Pharmaceutical exports fell at a faster pace of 5.36 per cent than the 2.25 per cent contraction in June.
Import growth also fell in July with inbound shipments totalling $33.99 billion, a 15.42 per cent rise. Imports had risen 19 per cent in June.
This was despite oil imports rising by more than 15 per cent to $7.84 billion in July. This is a result of Brent crude oil rising by 8 per cent, year on year, in July, according to World Bank commodity price data
Cumulatively, imports worth $146 billion have entered the Country in the current financial year, as compared to the $113 billion worth of imports in the same period of the previous year.