Exports surge to 21-month high

July shows highest monthly jump in nearly 2 years, at 11.6 per cent; rupee's fall, some recovery abroad and govt's recent measures help

Exports in July soared 11.6 per cent to $25.8 billion, compared to $23.1 bn in the same month last year. This is the highest growth rate in exports in 21 months, since October 2011, when exports grew 23.7 per cent over the same month of the earlier year.

This financial year (from April 1), exports fell in May and June, by 1.1 per cent and 4.6 per cent, respectively.

The rise in July’s exports was mainly on account of a falling rupee (at an all-time low of 61.81 against the dollar last week), coupled with a rise in demand in America, Africa and East Asia.

And, imports in July were $38.1 bn, down 6.2 per cent from $40.6 bn in July last year.  

“Continuing interest in Africa, Latin America, Asean (Association of Southeast Asian Nations) and the Far East regions is the main reason why exports have risen. We expect this trend to continue,” commerce secretary S R Rao said.

He said the government’s recent measures to help shipments would also help arrest the earlier fall in merchandise export. Total export in the April-July period reached $98.3 bn, about 1.7 per cent higher than the $96.6 bn in the corresponding period of 2012-13. In this period, imports rose 2.8 per cent to $160.7 bn against $156.3 bn in the same period last year, according to the data released on Monday.  The trade deficit in July, therefore, was $12.3 bn compared to $17.5 bn in July last year. During April-July, this deficit widened to $62.45 bn as against $59.7 bn in the corresponding period of 2012-13.In 2012-13, the current account deficit reached a historic high of 4.8 per cent of gross domestic product, due to a surge in import of gold and petroleum products.

“We expect our exports to do slightly better this year. Although the growth in four months has been a mere two per cent, our target is much higher, at 10 per cent for the present financial year,” he added.

In July, export of readymade garments, pharmaceuticals and textiles have been impressive; those of engineering goods and gold jewellery have fallen. Import of pearls, semi-precious and precious stones, transport equipment and fertilisers have risen; those of gold and silver, crude oil and vegetable oil have declined, said Anup K Pujari, director general of foreign trade.

According to M Rafeeque Ahmed, president, Federation of Indian Export Organisations, this positive trend in exports is likely to continue, with “positive signs emanating from the US and EU (European Union)”.

In July, crude oil imports stood at $12.7 bn, down eight per cent over the $13.8 bn in the same month last year. Total crude oil import in these four months of 2013-13 have reached $54.6 bn, up 2.7 per cent from the $53.2 bn in the same period of 2012-13.

“We expect this trend in exports to continue, as the government did the right intervention at the right time,” said Sanjay Budhia, chairman of the Confederation of Indian Industry’s export committee.

Non-oil imports in July reached $25.4 bn, falling 5.3 per cent against the $26.8 bn in July last year. However, during these first four months, non-oil imports rose three per cent, to $106.15 bn from $103.15 bn last year in the same period.

“The market is the US is gaining strength but the EU is still under economic stress. Though we have registered a growth of around 16 per cent in readymade garments in the US and EU markets, our export diversification in  non-traditional markets and sustained government help has also helped,” said A Sakthivel, chairman, Apparel Export Promotion Council.

 

Since the beginning of the fiscal exports have fallen for two consecutive months in May and June when it dropped by 1.11 per cent and 4.56 per cent respectively. 

 

The rupee touched an all time low of 61.81 against the dollar last week.

 

Last fiscal the current account deficit (CAD) reached a historic 4.8 per cent of GDP due to a surge in import of gold and petroleum products.