Trade winds carry no goods cheer in August

Goods trade marked another month of lacklustre performance. Trade deficit widened to a 10-month high of $24 billion in August as import and export performance remained dismal

- Rupali Sarkar

Headline exports contracted by 6.9% year-on-year last month, a faster pace compared to the 5.2% drop seen in imports.

Akin to July, much of the decline in exports and imports in August was driven by the sharp year-on-year contraction in oil shipments led by lower price and volume. But what is encouraging is that stripping off the volatile items of oil, gold and gems and jewellery; both core exports and imports have shown some signs of recovery with an increase in shipment of some heavyweight items.

The uptick in core imports reflects robust domestic demand and resilient economic momentum. Notably, the increase is broad-based across consumption items like electronics and capital goods, electrical and non-electrical machinery, and project goods. While this reinstates confidence in India’s growth story, an upturn in imports also casts concern over the already widening trade gap.