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Exports in May plunge 20% yoy, trade deficit narrows to 3-month low

"The fall in exports is becoming a trend and it is really worrying," said Anupam Shah, chairman of Engineering Export Promotion Council (EEPC) of India, adding that Indian exporters need a significant stimulus to become competitive.

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Falling global demand and persistent domestic bottlenecks have ensured a sixth straight monthly fall in India's exports, in May.

India exported $22.34 billion worth of goods in May as against $27.99 billion a year-ago, a drop of 20.19% in dollar terms. The main exporting sectors, including petroleum products, gems and jewellery, engineering and chemicals reported a negative growth in April.

"The fall in exports is becoming a trend and it is really worrying," said Anupam Shah, chairman of Engineering Export Promotion Council (EEPC) of India, adding that Indian exporters need a significant stimulus to become competitive.

The last time exports registered a positive growth was in November 2014, when it grew 7.27%.

Overall imports of India too fell in May, 16.52% year-on-year to $32.75 billion.

Crude oil imports during the month stood at $8.54 billion as against $7.44 billion month-on-month, while non-oil imports came in at $24.2 billion against $25.6 billion in April.

According to Reuters, India is reaping the benefits of a slump in global commodity prices that helped reduce gold imports by nearly 23% from April to $2.4 billion last month. The slump also brought down the cost of crude imports, which account for nearly a third of India's total imports, by about 41% in May from a year earlier to $8.5 billion. But in a sign of a pick-up in oil demand, imports jumped 15% from April.

International crude prices have made a significant jump in recent months, but analysts say the upside potential is limited due to ongoing oversupply.

The country's trade deficit however narrowed to a three-month low in May, brightening the outlook for its current account balance. The trade deficit shrank to $10.41 billion last month, its lowest since February, from $10.99 billion in April, data released by the trade ministry showed on Tuesday.

The data comes days after India's current account deficit (CAD), the broadest measure of its trade with the rest of the world, narrowed to a one-year-low of 0.2% of gross domestic product in the January-March quarter.

A recent report by HSBC said the crippling electricity shortages and poor rail, road and port connectivity are compounding the problems Indian exporters are facing amid weak global demand as well as a relatively strong rupee.

Soumya Kanti Ghosh, chief economic advisor of State Bank of India (SBI), said the trade deficit number has been on expected lines. India imported $2.42 billion worth gold in May against $3.13 billion in the previous month.

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