Contraction in global demand hit Indian exports for the eighth consecutive month, with outbound shipments falling 1.9 per cent to $24.9 billion in December against $25.4 billion in the corresponding period of FY12.
Imports, however, increased 6.3 per cent to $42.5 billion last month, widening the trade deficit by 20 per cent to $17.7 billion in December 2012, compared to $14.7 billion in the year-ago period.
While oil imports rose 23.5 per cent to $14.4 billion, non-oil imports declined marginally by 0.9 per cent to $28.1 billion, indicating industrial production still remained low in December after a 0.1 per cent contraction in November.
Cumulatively, exports declined 5.5 per cent to $214 billion in the April-December period, compared to $226.5 billion in the corresponding period in the last financial year.
Imports contracted 0.7 per cent to $361 billion, compared to $364 billion over the period. As such, trade deficit rose seven per cent to $147 billion against $137 billion.
The growing trade deficit has put pressure on India's current account deficit (CAD), which increased to an all-time high of 5.4 per cent of gross domestic product (GDP) in the July-September quarter.
Rafeeque Ahmed, president of the Federation of Indian Export Organisations (FIEO), said, "The trade deficit has already touched $147 billion and may cross $200 billion in FY13. Such a high deficit will put pressure on the current account and add to volatility of the rupee."
However, the silver lining is that import of gold, one of the main contributors to the rise in trade deficit, declined 15 per cent in the first nine months of the financial year.
However, oil imports, another key factor in the rising CAD, rose 12.1 per cent to $125 billion in April-December, constituting 35 per cent of India's total imports.
"While imports of four of the top five import commodities declined in the first nine months of the financial year, import of crude and petroleum products increased," said Director-General of Foreign Trade Anup Pujari.
However, the pace of contraction of exports has slowed down, raising hopes that these would pick up in the last quarter of this financial year.
Commerce Secretary S R Rao said, "All sectors have slightly improved except for textiles in December. With the incentive package coming into effect from January this year, we are hopeful that the exports' performance would improve."
Rao conceded that it would be difficult to achieve the target of $360 billion in exports with just three months to go in the current financial year.