India’s exports grew for the seventh straight month, rising by 34.1 per cent to $16.1 billion in May. This was led by a surge in shipments and prices of iron ore, along with flow of more consignments of engineering goods, gems and jewellery and chemicals from Indian shores.
The high level of industrial activity in the economy also meant that imports rose by over 38 per cent to $27.4 billion, data released by the commerce ministry today showed. A faster pace of increase in imports resulted in the trade deficit widening to $11.3 billion during May, compared with $7.8 billion a year ago.
While exports have maintained a growth rate of around 35 per cent for two months in a row, Commerce Secretary Rahul Khullar warned of possible pressure on margins, and consequently on consignments leaving Indian ports. Besides, he said that a part of the increase was attributed to last year’s low base.
“Don’t get carried away. Things are looking better than last year, but should we start popping champagne, my answer is no,” he told reporters.
The euro zone crisis, and the subsequent erosion in the value of the euro, is a big worry for exporters at the moment. Over the last 12 months, the Indian rupee has appreciated from around 67 to a euro last June to around 57 today.
“Over the next three to six months, if things continue like this, people who export to these market will figure out how to deal lower margins. Some of them will look at other markets,” said Khullar.
Federation of Indian Export Organisations president A Sakthivel agreed with Khullar. “We must watch the developments in Europe cautiously, as the Greek crisis may spread to other countries,” Sakthivel said. Europe accounted for over a fifth of India’s exports of $176.50 billion.
During April-May, exports grew by over 35 per cent to $33 billion against the same period last year, while imports were up over 40 per cent at $54.7 billion. Sectors such as engineering (29.6 per cent), gems and jewellery (37.8 per cent), leather (33.3 per cent), basic chemicals (38 per cent) and petroleum, oil and lubricants (over 70 per cent) led the show.
On the import front, non-ferrous metals and iron and steel exports more than doubled, while electrical machinery, transport equipment and machine tools registered an increase of around 15 per cent each.
