Golden touch: trade gap narrows to 30-mth low

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Rising exports, falling imports to help contain current account deficit, ease rupee’s woes

From page 01 NEW DELHI: Hopes of an economic turnaround have sprung anew with India’s exports recording its third successive month of expansion, growing 11.15% to $27.7 billion in September while imports, aided by plunging gold consignments that barely trickled in, fell 18.10% during the month, narrowing the trade deficit to a 30-month low of $6.7 billion.
The narrowing trade gap, which was $17.1 billion a year ago, triggered expectations that the government will be able to contain the current account deficit (CAD) (the gap between foreign exchange inflows and outflows) within the targeted $70 billion or 3.7% of GDP in 2013-14 against a record $88 billion or 4.8% of GDP hit last fiscal.
September imports of $34.4 billion were lowest since March 2011.
Gold and silver imports during the month came in at about $800 million against $4.6 billion in September last year, mirroring the effect of import curbs on overseas gold purchases as part of the government and RBI’s efforts to control a widening CAD. The government has raised the import duty on gold to 10% and has made it mandatory to export 20% of the imported metal in the form of ornaments. RBI also specified that gold importers would supply the metal only to jewellers or dealers who supply to ornament makers.

Gold imports at 7.2 tonnes in September (until September 25) was less than 142.5 tonnes in April, 161.4 tonnes in May, 31.5 tonnes in June and 47.8 tonnes in July, but higher than 3.4 tonnes in August.
Commerce secretary SR Rao said jewellery exports from India are likely to surge. According to Gems and Jewellery Export Promotion Council, India exported $2.68 billion of gold jewellery in value terms in April- August, down 59.4% from a year ago.
The government is expected to announce a set of financial incentives for jewellery exporters by the end of this month.
For sustaining exports, manufacturing needs to pick up and, therefore, availability of credit and cost of credit would be the key, said M Rafeeque Ahmed, president, Federation of Indian Export Organisations (FIEO).
FICCI president Naina Lal Kidwai said if current efforts continue, it may even be possible to exceed this year’s export target of $325 billion.                                             NAME RAHUL SINGH 2
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