Exports rise 12.4% in May in sharpest rise in 6 months

Trade deficit declines by 42% to $11.23 bn on yearly basis

Exports grew by a six-month high of 12.40% at $27.9 billion in May this year  against $24.91 billion in the same a year ago.

The outbound shipment was driven by 28.7 er cent increase in petroleum products and  22.09% in engineering goods, showed official figures released today.

Commerce secretary Rajeev Kher, however, said that he would like to see data for one more month to assess if signs of recovery in exports are there.

Imports, on the other hand, contracted 11.41% at $39.23 billion in May against $44.28 a year ago. This was partly reflective of 72% decline in gold imports.

As such, trade deficit declined by  42.01% at $11.23 billion in May against $19.37 billion in the same month of 2013-14.

Trade secretary Rajeev Kher said the trade ministry was in favour of "rationalising" the import duty and that there was a clear view that "normalcy" needed to be restored to gold imports.

 

"Export figures have begun to acquire their normal levels, which is encouraging," he told reporters.

 

Kher said he also favoured opening up agricultural exports, where possible, but added the government was ready to intervene if needed to contain onion and milk prices, key drivers of food inflation.

 

Although month-on-month increases in the import bill, particularly for oil, has kept the trade deficit high for three months in a row, analysts said the trade gap should be manageable, even with softer restrictions on gold.

 

"With better economic activity especially in the US and Europe, Indian exports are likely to stay on a reasonably better footing this time," said Anubhuti Sahay, an economist with Standard Chartered Bank in Mumbai.

 

"Unless global growth disappoints, risks to the trade deficit remain contained even if gold import restrictions are relaxed further," he said.