Exports continue to grow at double-digit rate in June

Rise 10.2% to $26.4 billion; imports grow 8.33% to $38.24 billion in the month

Merchandise exports grew 10.22 per cent to $26.4 billion in June from $24.02 billion in the same month last year, driven by strong demand for engineering goods, ready-made garments and petroleum products. This was even as the export number for June 2013 was revised upwards from $23.78 billion, thereby increasing the base.

This was a second straight month of double-digit growth in exports, with the rate in May higher at 12.40 per cent, official data released on Wednesday showed.

After contracting for almost 13 months, imports grew 8.33 per cent to $38.24 billion in June from $35.3 billion in the same month last year. The figure for imports in June 2013 was revised from $36.03 billion. The June trade deficit widened to a 13-month high of $11.76 billion from $11.24 billion in May 2014.

Exports during the April-June quarter stood at $80.11 billion, up 9.31 per cent from $73.28 billion in the corresponding period last year. However, imports during April-June 2014 contracted 6.92 per cent to $113.19 billion from $121.61 billion during the same period last year.

In June, oil imports soared by 10.90 per cent to $13.34 billion, compared with $12.03 billion in the same month a year ago. Oil imports during April-June also grew by four per cent to $40.78 billion from $39.20 billion. Non-oil imports during the month were up seven per cent to $24.9 billion. Non-oil imports during April-June reached $72.41 billion, down 12.1 per cent from $82.40 billion in the same period last year.

Gold imports were up 65.13 per cent to $3.12 billion in June from $1.88 billion in the same month last year, due to a partial easing of import restrictions and a lower base. According to credit rating agency CRISIL, since large private gold importers were allowed to resume purchases and nominated banks were permitted to offer gold loans to jewellery manufacturers from May, gold imports doubled in June from $1.7 billion in April 2014.

Non-oil, non-gold imports, an indicator for domestic demand and industrial growth, rose 1.42 per cent to $21.78 billion in June. In May, these imports were up for the first time in 10 months, at a lower rate of 0.5 per cent. This shows industrial production is on its way to a slow recovery. According to experts, outbound shipments are slowly seeing a turnaround on account of an improved global economy, coupled with a low base effect. Exports in June 2013 contracted 4.5 per cent.

Exports were driven by a 21.57 per cent rise in engineering goods, 38.37 per cent in petroleum products and 14.39 per cent in ready-made garments. “We are getting a good number of orders from the US. Our domestic manufacturing infrastructure is not able to support these,” said Anupam Shah, chairman of the Engineering Export Promotion Council.

Aditi Nayar, an economist with rating agency Icra, said the double-digit growth of exports was not expected to continue as the base effect waned and also because of the relative stability in the exchange rate. She added an unfavourable monsoon would also impact farm exports.

Improving global economies had kept export growth buoyant, the only silver lining as the trade deficit widened, said a note by Anand Rathi Research.

The trade deficit rose just 6.66 per cent in April-June 2014 to $70.3 billion from $65.87 billion in the corresponding period of the previous year.