India's import bill contracted for the first time in almost nine years during January 2009, led by crude oil and capital goods, which constitute nearly half the total imports.

Initial estimates available with the commerce ministry show that imports dipped 16.1 per cent to $18.92 billion in January 2009, compared with $22.56 billion in January 2008, when they grew at 64 per cent.

Non-oil imports, which have a share of 70 per cent in India's import bill, increased just 2.7 per cent in January 2009 against a 32 per cent increase in the previous month. This is because capital goods imports, which are seen as a barometer of industrial expansion, plunged 25.5 per cent in January. Capital goods consist of items like electrical goods, machinery and transport equipment.

"Drop in capital goods imports is always alarming. A drop in these items indicates a decline in investments within the country," said Abheek Barua, chief economist, HDFC Bank [Get Quote].

Only two days ago, a top commerce ministry official had said that, going by initial estimates, exports were expected to dip 22.3 per cent in January 2009.

Sources said of the 27 broad categories of goods imported by the country, only five grew - fertilisers, sulphur and unroasted iron pyrites, pearls and precious stones and project goods.

In the April-January period, 2008-09, imports expanded 26 per cent to $245 billion from $194 billion in the same period the previous year.

Crude oil imports, which usually have a share of about 30 per cent in total imports, recorded the sharpest contraction since October 2002 (the time since which RBI maintains oil import data) due to the more than 50 per cent annual decline in crude oil prices. Experts expect that as new contracts for crude oil get finalised at lower prices, crude oil imports into the country may show contraction in the coming months as well.

But with declining imports, the trade deficit gets narrower. If one takes the initial estimates of exports for January, trade deficit stood at $7.5 billion, a dip of 3.8 per cent over $7.8 billion seen in the same month of 2008.