Here's proof that India's trade sector is on the mend

October exports up by 13.5%.

According to DBS, there were more signs yesterday that the external sector is on the mend. Data out yesterday saw Oct exports rise 13.5% YoY.

This takes Apr-Oct shipments up 6.4% rebounding from last year’s negative finish. The improvement has also been notable on nominal basis – Jul-Oct13 monthly average is up circa 8% from the Jun quarter.

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This bottoming out for the external sector is in sync with the trend amongst the other Asian economies, helped by a relatively stable China and tentative signs of pick up in the Eurozone activity.

PMI manufacturing data also corroborates this trend as export orders have held up well even as the domestic order book continues to be cutback.

The rupee had appreciated in Sep-Oct, but has since trimmed gains. Much of this has been on the partial return of the oil-related dollar demand. The end-Nov expiry of the swap facility for banks to draw non-resident inflows and emphasis on rebuilding foreign reserves will also mark a floor for the USDINR.

The trade deficit meanwhile widened a notch to USD 10.5bn from Sep’s USD 6.8bn but halved from the same period last year. This was on the back of a modest pick-up in Oct oil imports, with payments making up 40% of the overall import bill.

This compares unfavourably with last year’s average of 34%. Much of this has been influenced by marked rupee depreciation, which has negated the beneficial impact from stable commodity prices.