Trade deficit: Where to from here?

India's trade deficit declined to US$ 6.8 bn during the month of September 2013. This is the lowest figure since March 2011. The same was largely on account of a sharp 18.1% reduction in imports - due to lower crude prices and gold and silver imports. On the other hand, merchandise exports increased by 11.2%. But the key question here is, is this a reason for India to cheer? Well, not entirely as this may not be a sustainable trend. Crude prices - which are not in our control - were lower last month and helped the country report better numbers. Further, while the investment scenario in the country may be dull at the moment, as and when things take turn for the better, companies will look at importing more capital equipment which would change the trade deficit scenario entirely. The long term solution we believe is to boost exports, by making India more competitive on a global scale.

Trade deficit: Where to from here?

Data Source: Mint