New Delhi, Oct. 9: Trade deficit fell to a 30-month low of $6.7 billion in September as curbs on gold and a fall in oil purchase resulted in a significant contraction in imports, bringing some stability to the rupee after months of excessive volatility.

Exports increased 11.15 per cent during the month to $27.64 billion compared with the same month in the previous year, while imports fell sharply by 18.10 per cent to $34.43 billion. Imports declined primarily because of a fall in crude oil and gold inflow.

“Imports have been contained as measures for restricting non-essential purchases have played out extremely well. This needs to be continued for the rupee to be stronger,” commerce secretary S.R. Rao told reporters here.

Both the Sensex and the rupee reacted positively to the trade data, though the Indian currency lost the gains it had notched up on account of the fall in the trade gap. The Sensex closed above the 20000-mark for the first time in almost three weeks.

Imports of gold and silver plunged more than 80 per cent to $0.8 billion in September from $4.6 billion a year earlier. Oil imports declined about 6 per cent to $13.19 billion.

Rao said, “The government has taken steps to curtail imports of non-essential commodities, particularly precious stones. That is the singular reason for the decline in trade deficit.”

With the commerce ministry having resolved the 80:20 issue, there should be a resurgence in the export of gems and jewellery, he said.

The Reserve Bank of India introduced the 80:20 scheme in July, under which 20 per cent of gold purchased overseas had to be exported to further import the metal.

Siddhartha Sanyal, economist with Barclays, said, “the numbers reinforce our expectation of a sub-$60 billion current account deficit for the full year, even after accounting for some pick-up in gold imports in the next two months because of the festive season demand”.

Rafeeque Ahmed, president of the Federation of Indian Export Organisations, said exports will touch $350 billion this fiscal. “The trade deficit is likely to come down to below $150 billion, which will help the government keep the CAD within $70 billion,” he said.

Rao said shipment from the country would not be hurt by the shutdown in the US.

Besides engineering, which contributes the most to the country's exports, has started showing positive growth.