Export Dip widens Trade Deficit to record 23.27 Billion Dollars
- India’s merchandise exports (also known as tangible exports or retail exports) slipped below the $30 billion mark for the first time in eight months in November to $29.88 billion, even as imports rose sharply
- Imports outpaced exports, jumping 38% from pre-COVID levels compared with the 16% increase in exports
- The trade deficit widened to a fresh record of $23.27 billion, from $19.9 billion in the previous month. This is almost 83% higher than the November 2019 levels. The trade deficit from April to November 2021 is now close to $122 billion, 7.5% over the same period in Financial Year 2020. The sharp 16% sequential slide in exports led to a flare up in the trade deficit to a record high which is really worrying.
- Experts are being cautiously optimistic that export momentum will revive, although the uncertainty engendered by the Omicron variant poses a concern regarding the immediate outlook.
INTERNATIONAL MERCHANDISE TRADE
According to United Nations guidelines, international merchandise trade statistics record all goods which add to, or subtract from, the stock of material resources of a country by entering (as imports) or leaving (as exports) its economic territory. Goods being transported through a country or temporarily admitted or withdrawn (except for goods for inward or outward processing) are not included in merchandise trade statistics.
Merchandise Export related Scheme in India
Remission of Duties and Taxes on Exported Products (RoDTEP) scheme - It is for Exporters to make Indian products cost-competitive and create a level playing field for them in the Global Market.
It was kicked in from January 2021, replacing the earlier Merchandise and Services Export Incentive Schemes (MEIS) that were in violation of World Trade Organisation (WTO) norms. The new RoDTEP Scheme is a fully WTO compliant scheme.
It covers about 75% of traded items and 65% of India’s exports.
To enable zero-rating of exports by ensuring domestic taxes are not exported, all taxes, including those levied by States and even Gram Panchayats, will be refunded under the scheme.
Steel, pharma, and chemicals have not been included under the scheme because their exports have done well without incentives.
Balance of Trade and Trade Deficit
The balance of trade, commercial balance, or net exports, is the difference between the monetary value of a nation's exports and imports over a certain time period. Sometimes a distinction is made between a balance of trade for goods versus one for services. The balance of trade measures a flow of exports and imports over a given period of time. The notion of the balance of trade does not mean that exports and imports are "in balance" with each other.
If a country exports a greater value than it imports, it has a trade surplus or positive trade balance, and conversely, if a country imports a greater value than it exports, it has a trade deficit or negative trade balance.
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