Merchandise exports contracted 4.16 per cent to $25.7 billion in May, compared with $26.7 billion in the corresponding period last year, primarily owing to a severe demand slowdown in the Euro zone. However, the commerce and industry ministry remains hopeful of achieving 20 per cent growth in exports this financial year.
Imports dropped to $41.9 billion in May, against $45.24 billion in the year-ago period, a fall of 7.6 per cent. This may dash hopes of an economic revival, after the Index of Industrial Production remained just about flat in April.
For the April-May period, exports fell 0.7 per cent to $50.1 billion, compared with $50.5 billion in the year-ago period, while imports stood at $79.8 billion, a fall of 2.4 per cent against $81.8 billion in April-May 2011-12. The total trade deficit during the two-month period stood at $29.7 billion, according to provisional figures released by Director General of Foreign Trade Anup K Pujari on Thursday.
In April, exports had risen only 3.23 per cent to $24.4 billion, compared to April 2011. Exports in March had contracted 5.7 per cent, triggering fears the current financial year would not begin on a positive note, unlike the previous financial year, when exports had a healthy run in the first half. Speaking to reporters, Commerce Secretary S R Rao said, “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 markets of Asean (Association of Southeast Asian Nations), 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 we have no doubt exports would increase 20 per cent this financial year.”
He indicated the Commerce Department, along with the Directorate General of Foreign Trade (DGFT), was working on a strategy to help exporters focus more on new markets. The DGFT is also working on an analysis of countries with which India has a trade deficit (China, Switzerland, Saudi Arabia, Iraq and Kuwait), as well as a trade surplus (the US, Singapore and the Netherlands).
According to Pujari, oil imports during the April-May period stood at $14.9 billion, compared with $13.1 billion in the year-ago period, a rise of 13.7 per cent. However, non-petroleum, oil and lubricant imports declined 5.5 per cent to $64.9 billion, compared with $68.8 billion in April-May 2011.
Gold and silver imports during the two-month period fell to $4.3 billion, compared with $9.2 billion in the year-ago period. Other sectors that saw a fall in imports were machinery, electronic goods and organic and inorganic chemicals. Since the beginning of this financial year, exports from the engineering goods, petroleum products, gems and jewellery and ready-made garment sectors have fared poorly, Pujari said.
“We all know what the situation is globally, and that is bound to impact our exports. But the condition today is not as bad as in 2008, when exports fell severely, due to the global recession. This year, measures announced in the Foreign Trade Policy would improve the bottom lines of our exporters. The fall in imports is purely due to poor domestic industrial growth, which is reflected in the fall in imports of machinery and capital goods,” said K T Chacko, director, Indian Institute of Foreign Trade.
Exporters seem optimistic. M Rafeeque Ahmed, president, Federation of Indian Export Organisations, said while the next few months may be challenging for exporters, they would be “back on track” by the second half of this financial year, taking overall exports to $350 billion.
Earlier this month, the government had announced a set of measures to boost exports. Among the significant ones were extension of the two per cent interest subvention and the zero-duty export promotion capital goods schemes till March 2013 and approval to procure inputs domestically through duty credit scrips.