With signs of a complete turnaround in the export market, merchandise exports for May increased 35.1% to $16.1 billion. This was the seventh month on the trot that exports recorded a growth after more than a year?s decline. Exports started to pick up from November last year.

Trade deficit also contracted in May as exports outpaced imports at a rate of 35.1% over 30.8%. May?s trade deficit favoured imports by $11.3 billion compared to May 2008-09 when the export deficit was around $9.7 billion.

In April-May 2010, exports stood at $33 billion, an increase of 35.7% over the previous year. In the same period imports surged 29.1% to $54.7 billion over last year. Though commerce secretary Rahul Khullar cautioned that a high growth in exports were primarily due to a low base effect, he said that the preliminary figures in May had shown signs of recovery in some of the worst affected sectors during the slowdown ? leather, engineering goods and gems and jewelery.

?My fingers are still crossed, we still aren?t out of the woods yet, but things are definitely looking brighter,? Khullar said. ?On the export front, $16 billion looks big compared to $12 billion, but May 2009 was $18.7 billion when things were normal, so that?s the benchmark.?

The director general of foreign trade has almost completed the sectoral review that will determine whether a handful of sectors, that are still feeling the pinch due to the slowdown, need another round of incentives or not. However the finance ministry is yet to release the non-budgeted Rs 1,350 crore for this purpose. Even Khullar is unsure of exactly what the subsidy budget will include if and when it comes. FE had reported the same on Thursday.

The May export numbers show that ready made garments and engineering goods exporters may still need some government assistance. In May garment exports dipped 7%. Though engineering goods managed to grow 29.6%, the overall outlook for the sector still looked bleak. ?We still can?t put our finger on it and the sector, cause of the number of products it is comprised of, is a behemoth,? he added.

Other commodities like leather goods exports increased 33.3% while gems and jewelry shot up 37.8%. Iron ore showed the greatest increase by doubling its exports thanks to burgeoning prices and quantity. On the import side, iron and steel, petroleum products and ferrous and non-ferrous metals posted strong numbers, thereby proving that India?s manufacturing sector was on a strong footing.