In worrying signals for policy-makers, exports contracted for the sixth month in a row, registering a drop of 20.19% to $22.34 billion in May, against $27.99 billion a year ago, mainly due to global slowdown and dip in crude oil prices that impacted overseas shipments of petroleum products.
The May figures come close to the biggest fall in exports in the last six years witnessed in March 2015, when outbound shipments contracted by 21%.
Imports also slipped by 16.52% year-on-year to $32.75 billion in May, the steepest since February 2014, when they shrunk by 17.09%.
This pulled down the trade deficit to $10.41 billion last month, its lowest since February, from $10.99 billion in April and $11.23 billion a year ago, commerce ministry data released on Tuesday showed.
The data comes days after current account deficit (CAD) narrowed to a one-year-low of 0.2% of the GDP in January-March. CAD is the difference between export earnings and import payments.
Economists said an improvement in the trade shortfall will help keep CAD in check in the April-June quarter.
“We think India’s external sector is on a strong footing and will remain so in the coming quarters,” Barclays said in a note.
Oil imports dropped 40.97% year-on-year to $8.53 billion in May. Non-oil imports, too, came down by 2.24% to $24.21 billion. Gold imports, however, shot up 10.47% to $2.42 billion in May.
On a cumulative basis, exports fell 17.21% to $44.4 billion in April-May, while imports declined by 12.2% to $65.8 billion.
The last time exports registered a positive growth was in November last year when it expanded 7.27%.
Sectors such as petroleum products and gems and jewellery reported negative growth in May.
Expressing concerns over the declining trend, exporters said the government should act fast in taking measures to help control the dip, especially at a time when India was looking to clock $900 billion worth of exports by 2020.
“The decline (in exports), if allowed to continue, will impact the Indian economy,” said SC Ralhan, president, Federation of Indian Export Organisations.
(With inputs from Reuters)