India’s India’s exports nosedived to 14.8% in July while imports fell to 7.6%, thanks to contracting demand in the euro zone and US. According to official data released on Tuesday, exports took a severe beating in four of the last five months. The import growth has been negative in the last three months.
Analysts attributed the dismal data to a demand slump in the West and the effect of a high base, especially in the first half of last year when exports of engineering goods and petroleum products grew at a scorching pace. To make it even worse, the manufacturing sector is witnessing a steep slowdown. The July trade data comes close on the heels of the industrial production data for June, showing a 1.8% dip.
?The world trade contraction is getting worsened. The worst fears about the European sovereign debt crisis is really impacting it (trade). The appetite has substantially come down in US markets too. The coming days are (going to be) tough,? said commerce secretary S R Rao, who released the data.
Rao admitted that meeting the $360-billion export target (around 20% growth) for 2012-13 would be a stiff challenge.
Exports for July stood at $22.4 billion, compared to $26.3 billion in July 2011.Imports declined to $37.9 billion from $41.1 billion. This left a trade deficit of $15.5 billion in July 2012, compared with $10.3 billion in June 2012 and $14.8 billion in July 2011. Rao said the ministry would take some “tactical measures” to boost exports and help the country increase its share in the global trade. ?The steps will be in the nature of easing technical barriers to exports or reducing transaction costs to make exports more competitive.?
Biswajit Dhar, director-general of the New Delhi-based Research and Information System for Developing Countries, said: ?Exports are falling faster than imports but the latter is a source of concern, because not everything is based on the domestic economy. We need to devise ways of streamlining exports.?
Engineering exports fell 16% in July 2012 while shipments of petroleum products plunged 19.4%.
?This fall is largely on account of the base effect since engineering exports in the first half of 2011 was rather high. Based on preliminary analysis, it seems the dip in engineering exports in first four months of 2012-13 is primarily because of the poor performance of four major sectors iron and steel, aircraft and spacecrafts parts, ships, floating structures and construction machinery,? said Aman Chadha, chairman, Engineering Export Promotion Council.
?The environment is challenging for exports but one must worry about declining imports also as it is an indicator of a slowdown in manufacturing. This requires aggressive marketing in new markets,? noted KT Chacko, director of Indian Institute of Foreign Trade.
Dhar said the Centre focus less on sops and find markets where cost of doing business can be reduced. Engineering goods, iron ore, fruits and vegetables have seen consistent negative growth, while six sectors of cotton yarn and fabric, leather, spices and tea registered positive growth.