Trade data for May showed the rate of growth fell 4.2 per cent to $25.7 billion, compared with $26.8 billion in the same month last year, due to a severe demand slowdown in the European and American markets for Indian goods.
Imports also came down 7.4 per cent, to $41.9 billion from $45.3 billion in May last year, reflecting slowing industrial activity.
Total exports so far in 2012-13 have reached $50.1 billion, down 0.7 per cent from $50.5 billion earlier. There has been a shrinkage in the volume of exports to traditional markets, while growth in the newer markets has also failed to pick up, due to the global economic condition.
Cumulative imports were also down 2.4 per cent at $79.9 billion against $81.9 billion in April-May 2011-12. But this fall brought cheer on the trade deficit front, which was $29.75 billion during April-May from $31.4 billion in the corresponding period of 2011-12, according to the data released by the ministry of commerce and industry on Monday.
|DIP IN CROSS-BORDER TRADE
Sector-wise export import during Apr-May ‘12-13
|Gems and jewellery
|Drugs and pharma
|Gold and silver
“Our exports are indeed coming down and we need to identify where. Demand is coming down in the Euro zone area, and it is unlikely that exports would experience a turnaround before the third quarter. However, growth will come from engineering products and petroleum goods that contribute a large chunk in our export basket and are oriented towards the Asian economies,” said Anis Chakravarty, director and senior economist at financial advisory firm Deloitte Haskins & Sells.
According to the data, oil import in May reached $15 billion, about 14 per cent higher compared to $13.1 billion in the same month last year. Total oil imports during April-May reached $28.9 billion from $26.1 billion in the same period last year, up 10.5 per cent.
“The decline in exports is on account of global trade slowdown and deceleration in domestic manufacturing. However, many countries in the world are facing huge setbacks in exports and India is no exception,” said M Rafeeque Ahmed, president, Federation of Indian Export Organisations.
He added that the softening of crude oil and metal prices also have their share in the reduced value-wise export of petroleum products, gems & jewellery and engineering.
Contrarily to the oil imports, non-oil import fell 16.1 per cent to $26.9 billion as against $32.1 billion in May 2011. Total non-oil import was 8.5 per cent lower, reaching $51 billion from $55.7 billion in April-May last year. Commerce secretary S R Rao had earlier said his department and the Directorate General of Foreign Trade (DGFT) were working on a strategy to help exporters focus more on the newer markets. DGFT is also working on an analysis on those countries with which India has a trade deficit (China, Switzerland, Saudi Arabia, Iraq and Kuwait) and a surplus (the US, Singapore and the Netherlands). This would help Indian exports in the long run, as the country has set a target of achieving $500 billion worth of these by 2014.
“We are passing through difficult times due to contraction in our traditional markets. We should be able to overcome these, as we are confident of our strategy of diversification into the markets of Asia, Africa and Latin America. We have taken policy initiatives to give the necessary fillip to our exports. We are not out of the woods but have no doubt that exports would increase by 20 per cent,” said Rao.