India's trade deficit widened for financial year 2014-15, according to a report released by the Ministry of Commerce and Industry. The trade deficit for April-March 2014-15 is estimated at $137.01 billion which is higher than the deficit of $135.80 billion recorded during April-March 2013-14.
The country closed its trade balance account on a disappointing note as figures for exports slumped further. Exports for the last fiscal were valued at $310.53 billion slumping by 1.23 per cent in dollar terms. The export figures missed the target of $340 billion set by the government for the financial year, ending lower than the previous year’s target of $325 billion. In rupee terms exports declined by 0.42 per cent over the previous fiscal.
Over the past year, slowdown in manufacturing and softening of metal and commodity prices has led to a slump in exports of the country. The global trade demand has slowed down in recent years due to the prolonged recession in the advanced economies. But the situation looks even worse as a report released by WTO this week showed that trade demand is unlikely to improve dramatically this year.
The government of India is taking steps to revive the sector but with the global trade demand slumping, it would be difficult for the government to arrest the decline of exports.
Recently the government launched its new Foreign Trade Policy for 2015-2020, announcing incentives for the dwindling export sector. The government announced incentives under the Merchandise Exports from India Scheme and Services Exports from India Scheme to boost the exports in the country. The FTP also sets a goal for doubling India's merchandise and service export to $900 billion. The government under the FTP also launched an Export Promotion Mission while also providing support for agricultural exports.
Imports, on the other hand, appreciated 0.69 per cent in rupee terms while declining 0.59 per cent in dollar terms. Oil imports during April-March, 2014-15 were valued at $138.26 billion which was 16.09 per cent lower than the oil imports of $164.77 billion in the corresponding period last year. Non-oil imports, on the other hand, were 8.53 per cent higher than the previous fiscal.
India, along with its Asian counterparts, has lost competitiveness as the global demand slumped. But as the global economy picks up albeit slowly, the Indian government would need to make its exports more competitive by ensuring that India can stay ahead of its Asian competition as it takes over the space left by the Chinese economy in the coming years.
(Edited by Joby Puthuparampil Johnson)