India’s outbound shipments could slow amid the global recession and uncertainties, Commerce and Industry Minister Piyush Goyal said on November 24.
In October, the country’s exports declined sharply 17 percent, the first shrinkage in nearly two years. The trade deficit widened sharply. India’s current account deficit will beach the red line of 3 percent of gross domestic product this fiscal year, primarily because of the trade gap.
India’s trade deficit has ballooned in recent months amid elevated commodity prices and a recovering domestic economy which has boosted imports. Meanwhile, a slowing global economy has pressured outbound shipments.
The widening of the trade deficit is due to the rise in oil imports amid high crude oil prices, said Goyal, who was speaking at Times Now Summit.
The country is on the path of rapid recovery. India is seen a global bright spot and is evincing interest from companies that is seeking to shift away from China, the minister said.
While the trade deficit has widened, the trajectory is under control, he added.
As such, the import basket comprises large chunks of raw materials, intermediate and capital goods, as well as crude oil, shipments of which indicate higher domestic activity, according to the minister.
Capacity utilization of over 80 percent in most industries is a sign of upcoming investments, Goyal said.
While India will be among the fastest growing major economies this year, growth forecasts have been slashed in recent weeks. However, the government is hopeful of a sustained medium-term growth trajectory.
Trade pact with UK
India was expected to sign the free trade pact with the United Kingdom by Diwali this year but the process was stalled due to change in leadership in the UK.
Responding to a question on whether the trade talks would be prolonged, Goyal said that the negotiations were underway and decisions would not be taken in a hurry.“Everything is on the table… until you sign on the dotted line, everything is open,” he added.