After keeping the last year’s pace in April-May, the monthly non-oil trade deficit has started coming down drastically from June onward and the trend is set to stay such in the coming months. While in the first quarter, the non-oil gap was about USD 24 billion, it is seen at slowing down in the subsequent quarters ending the year between USD 65-72 billion for the FY 2013-14.
“The economic slowdown in the domestic market is also reflecting on the non-oil imports. On the other hand, oil imports may continue to increase because of upward pressure on crude prices. On the other hand, the exports of petro-products may not see significant rise as the installed refining capacity would remain more or less the same. As a result, the oil trade deficit may exert pressure again and may exceed the last year’s level of USD 109 billion,” the Assocham study noted.
Commenting on the trade scenario, chamber President Rana Kapoor said, “While the total exports in July and August have shown significant recovery courtesy a sharp correction in rupee, an action plan is needed to ensure that the overall shipments exceed the double digit expansion while imports stay muted. This is imperative in view of the bigger issue of current account deficit which has been troubling the macro-picture of the Indian economy, making it more vulnerable than other emerging markets which do not such the CAD hang-over”.
“Crude oil and petroleum products account for a major share of India’s external trade – as much as 29-30 per cent. However, the share of crude oil in the country’s total import bill is much higher. Of the USD 491 billion imports, the oil imports aggregated USD 169 billion”, adds the study.
Likewise, in the export basket of USD 300 billion the petro products topped the table with shipments from refinery amounting to USD 60.29 billion. The trend is expected to remain so in the current fiscal as well, the study indicated.
It said, what India needs is an urgent holistic energy policy so that a lot of investment can be attracted in the exploration of both crude and natural gas. The policies governing pricing to be paid to the contractors should be fixed in a transparent manner.
Besides, it is not only the rising bill of oil subsidies which should be addressed, over-dependence on the sector for raising taxation revenue both by the Centre and the state governments should be reduced. After all, the growing Indian economy would need reasonably priced fuel.