India’s merchandise exports fell 5.5 per cent to $25 billion in June, compared with $26.5 billion in the corresponding month last year, as demand in the struggling European economies continued to decline. Imports recorded a much sharper fall — declining 13.5 per cent to $35.4 billion, compared with $40.9 billion in June 2011. This sharp fall reflected the industrial slowdown.
Total exports during the quarter ended June stood at $75 billion, a 1.7 per cent fall compared with $76.50 billion in the year-ago period. Cumulative imports, too, fell six per cent to $115.3 billion, against $122.7 billion in the first quarter of 2011-12, according to data released by the ministry of commerce and industry today.
Amid the prevailing environment of gloom, however, was some good news. For the quarter ended June, the trade deficit narrowed to $40.05 billion from $46.23 billion in the corresponding period last year. The trade deficit for June also fell to $10.31 billion from $14.4 billion in June 2011.
Export-import sector performance in April-June 2012-13 ($bn)
|Top Five Export
|Gems and jewellery
|Drugs and pharmaceuticals
|Top Five Import
|Gold and silver
|Pearls and semi-precious stones
|Source: Ministry of Commerce & Industry
“Exports continue to fall on a year-ago basis, reflecting both weak global demand, as well as likely supply side issues. India’s export-facing industries are relatively more exposed to Europe than most of their Asian counterparts, and these are struggling in the face of weak demand in Europe. The weak rupee, too, appears to have offered exporters little assistance,” said Glenn Levine of Moody’s Analytics.
Commerce Secretary S R Rao said exports would pick up by the end of the second quarter, when the steps announced under the Foreign Trade Policy start showed results.
In June, non-oil imports fell 17.80 per cent to $22.68 billion, compared with $27.59 billion in the year-ago month, indicating a slowdown in the domestic economy and a fall in demand by the Indian industry. Non-oil imports during the April-June period fell 11.6 per cent to $73.7 billion, compared with $83 billion in the corresponding period of the previous year.
Moody’s said the drastic fall in non-oil imports was a reflection of the “plunge in domestic confidence, demand and production”. The Indian industry is reeling under high interest rates and slowing demand. In May, industrial output rose just 2.4 per cent, with severe contraction in capital goods adversely impacting investment plans.
Oil imports in June fell 4.4 per cent to $12.3 billion from $13.27 billion in June 2011. However, oil imports during the April-June period rose 5.5 per cent to $41.6 billion, against $39.4 billion in the year-ago period.
Last month, Commerce & Industry Minister Anand Sharma had stated even if difficulties persisted in India’s traditional export markets — the US and Europe — these would be somewhat offset by new markets such as Asia, Latin America and Africa.
“The new markets have not changed our export basket drastically. The slowdown today is more broad-based compared to 2008. So, these markets are also suffering. We still heavily rely on the developed world for our exports. I believe the negative trend is going to continue till at least the second quarter,” said Rupa Rege Nitsure, chief economist, Bank of Baroda.
The annual supplement to the Foreign Trade Policy (2009-2014), announced last month, offered a slew of measures for exporters. These included extension of the interest subvention of two per cent for labour-intensive sectors and the Export Promotion Capital Goods Scheme till March 2013. The government has set a target of $350 billion of exports this financial year and $500 billion by 2014. In 2011-12, exports stood at $303.7 billion, while imports stood at $488.6 billion.