Figures released by the ministry of commerce on Friday show that for the full 2008-09 fiscal, exports stood at $168.7 billion, lower than even the revised target of $175 billion. Imports grew by 14.3% to $287.8 billion in 2008-09 from $251.7 billion in 2007-08.
Of particular concern for industry is the 18.9% decline in non-oil importsa key measure of domestic economic activityto $11.7 billion in March 2009 from $14.4 billion a year earlier. Ficci president Harsh Pati Singhania agreed this could slow industrial production, especially if concentrated in machinery, equipment and project goods.
Indias industrial output slipped by 1.2% in February. Macquarie Research has, nevertheless, projected it to grow at 10% in March. In 2008-09, exports grew at an average of 30% until September, when the collapse of Lehman Brothers ignited a global crisis. Exports grew at over 29% in 2007-08.
The trade deficitthe difference between exports and importswidened 34% to $119 billion in FY09 from $88.5 billion in FY08. The World Trade Organisation estimates global trade to fall by 9% in 2009-10. RBI governor D Subbarao had warned that the global recession may not only continue through 2009, but could prolong into next year.
However, the Federation of Indian Export Organisation is optimistic that exports would pick up from July to post a 10% growth to $185 billion this financial year. Said FIEO president A Sakhtivel, The inventories of buyers in Europe will be over by August. European buyers have started visiting India and international trade fairs for procurement. Diversifying exports to Latin America, Africa and Asia will help India register better growth, he added.
Most analysts argue that a recovery is unlikely before the second half of 2009-10. The swine flu outbreak that started in Mexico and spread to the US and Canada could further impact global trade from a decline in the movement of goods and labour. Projecting global GDP to decline by 1.3% in 2009, the International Monetary Fund said last month that a sharp drop in capital flows and collapse in global trade had hit emerging markets.
RBI expects India to grow at 6% in 2009-10. But the US and Europe, which account for around 35% of Indias exports, are yet to show signs of the so-called green shoots of recovery. This has dampened prospects for an early turnaround in industrial output and shipments.