Exports contracted 15.88 per cent to $32.25 billion in July because of global demand slowdown and a fall in the outbound shipments of petroleum, gems and jewellery, and other key sectors, according to official data released on Monday.

Imports declined 17 per cent to $52.92 billion from $63.77 billion in July 2022.

This led to the narrowing of trade deficit to $20.67 billion for the month against $25.43 billion in July 2022.

“Sluggish global demand with growth contraction and softening of commodity prices has led to the continuous decline in exports,” A. Sakthivel, president, FIEO, said.

“We are of the view that exports will start showing
better growth numbers, as things are expected to improve in the next few months with fresh orders or order bookings for the festival and New Year season beginning to come,” he said.

Aditi Nayar, chief economist, Icra said: “Based on the available trends, we expect the current account deficit to widen to $11-13 billion in the first quarter of the fiscal and further to $15-17 billion in the second quarter, with the monthly trade deficit likely to remain above the $20 billion mark in the next couple of months.”

Windfall tax hike

The government on Monday hiked special additional excise duty on crude petroleum to Rs 7,100 per tonne with effect from August 15.

In the last fortnightly review, windfall tax on domestically produced crude oil was set at Rs 4,250 per tonne.

Besides, the Special Additional Excise Duty (SAED) or duty on export of diesel will be hiked to Rs 5.50 per litre from Re 1 per litre at present.

A duty of Rs 2 per litre will be imposed on jet fuel or ATF with effect from August 15. Currently, there is no SAED on the jet fuel. SAED on petrol will continue to be zero.