Lok Sabha Question No. 355 (UNSTARRED), answered on 2017-12-18
Subject: Trade Deficit
Ministry: COMMERCE AND INDUSTRY
Asked by: GAURAV GOGOI, JYOTIRADITYA MADHAVRAO SCINDIA, KRUPAL BALAJI TUMANE

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

## LOK SABHA UNSTARRED QUESTION NO.355 TO BE ANSWERED ON 18 th  DECEMBER, 2017

## TRADE DEFICIT

355. SHRI GAURAV GOGOI:

SHRI JYOTIRADITYA M. SCINDIA: SHRI KRUPAL BALAJI TUMANE:

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

- (a) whether it is a fact that India's exports and imports have registered growth in the last quarter and if so, the details thereof;
- (b) whether the country's trade deficit jumped to three years high in October this year which may further widen current account deficit;
- (c) if so, the factors responsible for country's increase in trade deficit;
- (d) whether the Government has taken any concrete steps to resolve the grievances of exporters to overcome widening of trade deficit; and
- (e) if so, the details thereof?

## 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): India's overall export (merchandise and services) registered a positive growth of 8.73% and overall import registered a positive growth of 15.24% during the last quarter 2017-18 (July-Sept) as compared to the corresponding period of previous year as per the details given below:

(In US$ billions)

| Period               |   Export | %Change   |   Import | %Change   |
|----------------------|----------|-----------|----------|-----------|
| 2016-17 (July-Sept)  |   105.99 | --        |   114.21 | --        |
| 2017-18 (July-Sept)* |   115.24 | 8.73      |   131.62 | 15.24     |

Source: DGCI&S & RBI, (*Provisional)

(b) & (c): The details of India's total trade deficit (merchandise and services) for the last three years and the current year are as follows:

(In US$ billions)

| Years              |   Export |   Import |   Trade Deficit |
|--------------------|----------|----------|-----------------|
| 2014-15            |   468.46 |   529.61 |          -61.15 |
| 2015-16            |   417.43 |   466.72 |          -49.3  |
| 2016-17            |   436.53 |   479.82 |          -43.29 |
| 2016-17(Apr-Sept)  |   211.6  |   222.6  |          -11    |
| 2017-18(Apr-Sept)* |   226.63 |   267.42 |          -40.79 |

Source: DGCI&S & RBI, (*Provisional)

The data in the above table reveals that the overall trade deficit has a decreasing trend during the last three years. However, it has increased for the current year 2017-18 (Apr-Sept) as compared to the corresponding period of the previous year. As services trade data for October 2017 are yet to be released by Reserve Bank of India, the overall trade deficit for October 2017 is not available. The merchandise trade deficit has jumped to three years high at US$ 14 billion in October this year. Trade deficit  depends  upon  relative  fluctuations  in  the  import  and  export  of  different  commodities.  The increase in imports is mainly because of oil imports to the tune of US$ 9.3 billion during October 2017,  which  was  27.9  percent  higher  than  oil  imports  of  US  $  7.3  billion  in  October  2016.  The increase in value of oil imports is also attributed to the increase in global Brent prices ($/bbl) by 15.87 % in October 2017 vis-à-vis October 2016 as per World Bank commodity price data. There has been increase in imports of other commodities also such as coal, iron and steel and non-ferrous metals. On the  exports  side,  there  has  been  decrease  in  exports  of  Gems  and  Jewellery,  Pharmaceuticals  and Ready Made Garments  leading to relative increase in trade deficit in October 2017.

(d) & (e): 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. Holders of AA / EPCG and EOUs would not have to pay Integrated Goods and Services Tax (IGST), Cess etc. on imports. Also, domestic supplies to holders of AA / EPCG and EOUs would be treated as deemed exports. During the  mid-term  review  of  Foreign  Trade  Policy,  export  incentives  under  Merchandise  Exports  from India (MEIS) have been increased by 2% across the board for labour intensive MSME sectors leading to additional annual incentive of Rs 4,567 cr. This was in addition to already announced  increasein 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 cr. Further, incentives under Services Exports  from  India  Scheme  (SEIS)  have  also  been  increased  by  2%  leading  to  additional  annual incentive of Rs 1,140 cr.