Non-oil imports, largely comprised of industrial inputs and capital equipment, contracted for the first time in over six years, by 0.5 per cent in January because of slowing production demand in the industry. Non-oil imports at $13.99 billion accounted for three-fourths of total imports in January.

Monthly trade data released today by the department of commerce showed that overall imports too fell for the first time in January this fiscal by 18.2 per cent. This was because of a plunge in global crude oil prices that pulled down oil imports down by 47.5 per cent in January.

Apart from the sharp drop in oil prices over the past few months, falling exports too could be responsible for the slowdown in imports. Exports dropped for the fourth consecutive month in January by 15.9 per cent to $12.38 billion. “The slump in exports has certainly hit duty-free imports of raw materials for the export sector, which is why non-oil imports have taken a hit,” said K T Chacko, former Director General of Foreign Trade and director of Indian Institute of Foreign Trade. Total imports for the April-January period, however, stood at $243.4 billion taking the country’s trade deficit up 65% over that of last year.

This is because of the expenditure the government had to incur on account of oil imports earlier this fiscal when crude was at an all-time high. The slump in January exports has taken cumulative export growth down to 13.2% down from a 30-plus% growth rate in the first half of the fiscal.