NEW DELHI: India’s trade deficit narrowed to a five-year low of $4.8 billion in the first month of the current financial year, led by a sharp fall in gold imports due to a nationwide strike by jewellers protesting against the proposed 1% excise duty and a decrease in inbound oil shipments.

Exports declined for the 17th straight month, with shipments dropping 6.74% to $20.56 billion in April, while imports fell 23.1% to $25.4 billion, dragged down by lower oil imports, according to data released by the Ministry of Commerce and Industry on Friday. The trade deficit shrank for the fourth consecutive month.

“The trend of falling exports is in tandem with other major world economies,” the ministry said in a statement. Gold imports declined 60.47% to $1.23 billion. Oil purchased from overseas was valued at $5.66 billion, 24% lower than a year ago, whereas non-oil imports dipped 22.83% to $19.76 billion.

“Though the export numbers are disappointing, there is a huge relief on the trade deficit front. We have bottomed out on the exports front and order books in sectors like gems and jewellery, textiles and agri commodities have improved,” said Ajay Sahai, Director General at the Federation of Indian Export Organisations.

Iron ore exports grew the sharpest to $54.52 million from $1.82 million a year ago. The reduced import bill for April is also attributed to a drop in shipments of coal, iron & steel, fertiliser, machinery, project goods and transport equipment.

Non-oil, non-gold imports, seen as a measure of domestic demand, fell 17.6% to $18.51billion, which Aditi Nayar, ICRA’s senior economist called startling, given the modest decline witnessed over the recent past.

“We hope exports reach the positive zone in June-July and expect double-digit growth from October onwards,” Sahai said. “Going further, even as commodity prices remain subdued, the favourable base-effect of commodity prices is likely to impart an upward bias to India’s exports,” said Yes Bank chief economist Shubhada Rao.

On services exports, the contraction continued for the fifth consecutive month. The services trade surplus in March was $4.99 billion. The net export of services for April-March 2015-16 wasat $69.59 billion, lower than $76.58 billion in 2014-15.

“Despite anticipated savings related to major import items such as crude oil, coal and fertilisers, India’s current account deficit is expected to widen modestly to $25 billion in FY2017 from $21 billion in FY2016 on account of a rise in gold imports and continued sluggishness in merchandise exports,” Nayar said.