Lok Sabha Question No. 421 (UNSTARRED), answered on 2018-02-05
Subject: Trade Deficit
Ministry: COMMERCE AND INDUSTRY
Asked by: GAURAV GOGOI, JYOTIRADITYA MADHAVRAO SCINDIA, Tejpratap Singh,Yadav

## GOVERNMENT OF INDIA MINISTRY OF COMMERCE & INDUSTRY (DEPARTMENT OF COMMERCE)

## LOK SABHA UNSTARRED QUESTION NO. 421 TO BE ANSWERED ON 05 th  FEBRUARY,2018

## TRADE DEFICIT

## 421.   SHRI GAURAV GOGOI:

SHRI JYOTIRADITYA M. SCINDIA: SHRI TEJ PRATAP SINGH YADAV:

Will the Minister of COMMERCE & INDUSTRY ( वा ͨणÏय एवं उɮयोग मंğी ) be pleased to state:

- (a) whether  India's  Trade  Deficit  has  widened  during  the  last  three  years  and  the current year, particularly in past few months and if so, the details thereof along with the reasons therefor;
- (b) the names of countries with which India's trade deficit has widened during the said period along with the details of the targets fixed and achieved in terms of country's imports and exports during the period;
- (c) whether the Government has received representations from various stakeholders to give impetus to exports and if so, the details thereof along with the steps taken to address their concerns;
- (d) whether  the  rising  trade  deficit  is  alarming  and  the  import  profile  needs  to  be analysed carefully and if so, the details of its impact on Indian economy indicating the sectors adversely affected thereby; and
- (e) the concrete steps which the Government proposes to take to address the situation and minimize the impact of trade deficit?

## ANSWER

okf.kT; ,oa m|ksx ea=ky; esa jkT; ea=h ¼Jh lh- vkj- pkS/kjh½

THE MINISTER OF STATE IN THE MINISTRY OF COMMERCE AND INDUSTRY (SHRI C. R. CHAUDHARY)

- (a): The details of India's merchandise export, import and trade balance for the last three years and the current year are as follows:

(Value in US$ billions)

| Year    |   Export |   Import |   Trade Balance |
|---------|----------|----------|-----------------|
| 2014-15 |   310.35 |   448.03 |         -137.68 |
| 2015-16 |   262.29 |   381.01 |         -118.72 |
| 2016-17 |   275.85 |   384.36 |         -108.5  |

| 2016-17(Apr- Dec)   |   199.47 |   277.90 |   -78.43 |
|---------------------|----------|----------|----------|
| 2017-18(Apr-Dec)*   |   221.81 |    342.4 |  -120.58 |

Source: DGCI&S, Kolkata (*Provisional)

The  data  in  the  above  table  reveals  that  the  merchandise  trade  deficit  has  a  decreasing trend  during  the  past  two  years.  However,  it  has increased  for  the  current  year  2017-18 (Apr-Dec)  as  compared  to  the  corresponding  period  of  the  previous  year.  Trade  deficit depends upon relative fluctuations in the import and export of different commodities due to the global and domestic factors such as demand and supply in domestic and international markets,  currency  fluctuations,  cost  of  credit,  logistics  costs,  etc.  The  price  of  petroleum products has increased considerably resulting in increased trade deficit.

(b): The details of countries with which India's trade deficit has widened in 2016-17 as compared to 2014-15 are as follows:

| S. No.        |   Countries/SAR |   2014-15 |   2015-16 |   2016-17 |   %Change in 2016- 17 over 2014-15 |
|---------------|-----------------|-----------|-----------|-----------|------------------------------------|
| Br Virgn IS   |           -0.16 |     -0.71 |     -6.31 |   3758.02 |                                  1 |
| Lithuania     |           -8.68 |   -126.26 |   -175.17 |   1917.9  |                                  2 |
| Lao Pd RP     |          -17.97 |   -142.09 |   -181.65 |    911.01 |                                  3 |
| Solomon Is    |           -8.25 |    -64.96 |    -51.66 |    526.1  |                                  4 |
| Chad          |          -22.09 |   -277.38 |   -130.84 |    492.36 |                                  5 |
| Azerbaijan    |          -88.13 |    -43.72 |   -421.4  |    378.17 |                                  6 |
| Burkina Faso  |          -38.88 |   -129.32 |   -141.48 |    263.92 |                                  7 |
| Dominic Rep   |         -149.74 |   -303.61 |   -449.88 |    200.43 |                                  8 |
| Ghana         |         -577.21 |  -2357.54 |  -1257.52 |    117.86 |                                  9 |
| South Africa  |        -1194.52 |  -2360.35 |  -2287.8  |     91.52 |                                 10 |
| Iran          |        -4779.96 |  -3497.24 |  -8126.89 |     70.02 |                                 11 |
| Russia        |        -2152.21 |  -2997.17 |  -3615.25 |     67.98 |                                 12 |
| New Caledonia |          -10.61 |    -45.67 |    -15.89 |     49.79 |                                 13 |
| Canada        |        -1553.41 |  -2215.61 |  -2127.4  |     36.95 |                                 14 |
| Guinea Bissau |         -148.61 |   -183.7  |   -194.01 |     30.55 |                                 15 |
| Argentina     |        -1532.06 |  -1935.07 |  -1990.03 |     29.89 |                                 16 |
| Botswana      |         -968.42 |   -489.85 |  -1230.28 |     27.04 |                                 17 |
| Finland       |         -587.3  |   -753.89 |   -741.93 |     26.33 |                                 18 |
| Japan         |        -4745.79 |  -5187.37 |  -5908.9  |     24.51 |                                 19 |
| Austria       |         -452.82 |   -487.28 |   -525.19 |     15.98 |                                 20 |
| Ukraine       |        -1890.08 |  -1491.98 |  -2171.31 |     14.88 |                                 21 |
| Australia     |        -7465.11 |  -5635.8  |  -8196.68 |      9.8  |                                 22 |
| Luxembourg    |          -32.22 |   -167.66 |    -34.6  |      7.4  |                                 23 |

|   24 | Equtl Guinea   |   -734.37 |   -439.77 |   -786.61 |   7.11 |
|------|----------------|-----------|-----------|-----------|--------|
|   25 | China P RP     |  -48477.5 |  -52696.4 |  -51110.4 |   5.43 |

(d): because of comfortable foreign exchange reserves.

Source: DGCI&S, Kolkata (*Provisional) As  per  Foreign  Trade  Policy  2015-20,  the  Government  aims  to  increase  India's  export  of merchandise and services from US$ 465.9 billion to approximately US$ 900 billion by 201920  and  to  raise  India's  share  in  world  exports  (Goods  and  Services)  from  2%  to  3.5%. However, in view of global slowdown leading to lower international demand, fluctuations in exchange rates and commodity prices, the exports of merchandise and services in 2016-17 were US$ 437.23 Billion. (c): There is regular mechanism  of interaction with trade organisations/export promotion councils  and their suggestions are taken into consideration in review of export promotion schemes. Export incentives were increased in respect of labour intensive sectors in the Mid Term Review of Foreign Trade Policy announced in December 2017. The increasing trade deficit in  spite of  positive growth  of  exports is mainly due  to higher  imports  of  the  Petroleum  Crude  &  Products,  Gems  &  Jewellery,  Electronics Items, Chemicals & Related Products, Machinery and Ores & Minerals which contribute to more than  70%  share  in  total  import.  However,  the  impact  on  economy  has  been  mitigated

(e): In order to increase the competitiveness of India's exports and minimize the trade deficit, the Government announced a major relief package for exporters in October 2017 by extending the Advance Authorization (AA)/ Export Promotion Capital Goods (EPCG)/ 100% EOU schemes to sourcing inputs etc. from abroad as well as domestic suppliers.  During the mid-term review of Foreign Trade Policy, export incentives under Merchandise Exports from India (MEIS) have been increased by 2%   for labour intensive and MSME sectors leading to additional  annual  incentive  of  Rs  4,567  crore.  This  was  in  addition  to  already  announced increase in MEIS incentives from 2% to 4% for Ready-made Garments and Made Ups in the labour  intensive  Textiles  Sector  with  an  additional  annual  incentive  of  Rs  2,743  crore. Further,  incentives  under  Services  Exports  from  India  Scheme  (SEIS)  have  also  been increased by 2% leading to additional annual incentive of Rs 1,140 crore.

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