The Trade Deficit for Feb 2014 has again come at a low $8bn. This is the lowest since Sep 2013.
Imports declined over 17%, with oil imports down 3% and non oil imports down 24%.
However we are seeing a declining trend in exports as well, and it seems like countries abroad are cutting down on their imports from India too. Exports were down 3% from the previous year, and if you look at the graph closely, form a strong downward trend.
How do exports go down in a situation when the rupee has fallen over 10% over last year? The answer is evident - the world we export to either doesn’t want our goods or is cutting down its trade deficit too.
While the rupee remains at 60, we have to note carefully that this is not because of a changing trade scenario, but simply because of foreign capital inflows.