Largely undeterred by the problems in the Western economies, India?s merchandise exports maintained their robust growth in September at 36.3%, although a decline in growth rate for the second straight month from July?s heady 82% jump prompted policymakers to perceive a deceleration.
As per the provisional data released on Wednesday, exports in September stood at $24.8 billion, as against $24.3 billion in August. In what reflects the slowing of demand and investment in the economy, September saw the slowest growth in imports since April at 17.2%. Even the absolute import figure for the month was the lowest since April at $34.6 billion.
The trade deficit for the month, therefore, stood at $9.8 billion, significantly lower than $14 billion in the previous month.
Commerce Secretary Rahul Khullar said, ?the good news is that exports continue to grow over last year, but the heady numbers have gone, it is clear there is a deceleration.? On Tuesday, the RBI restored the interest subvention of 2% for rupee credit of exporters from labour-intensive sectors. On Thursday, the commerce and industry minister Anand Sharma is expected to announce more sops for exporters under a review of the Foreign Trade Policy 2009-14.
Khullar said what enabled Indian exporters to do well despite the slow growth in world trade are a diversification of the product base and focus on new markets.
During the April-September period, India’s exports grew by 52.1% to $160 billion and imports expanded by 32.4% to $233.5 billion. The trade gap for the period stood at $73.5 billion.
Meanwhile, what worries experts is the growing trade deficit which needs to be tackled. Admitting the same, Khullar also said that the balance of trade is ?very high.? The government, however, is confident that the balance will remain in the manageable terrain noting the fact that if export growth slows down, imports would slowdown too.
KT Chacko, director, Indian Institute of Foreign Trade said: ?The widening trade gap is a matter of great concern. Unless addressed, this could be a problem in the longer run.?
Expressing similar sentiments, apex exporters body Fieo president Ramu S Deora also said that the trade deficit number is huge and may touch $150 billion by the end of 2011-12.
The sectors that exhibited major export growth during the April-September include engineering (103%), petroleum and oil lubricants (PoL) (53%), gems and jewelery (23%), ready-made garments (32%), marine products (48%) and drugs (33%).
Khullar also said that the total exports for the current fiscal may reach ?striking range? of $290-300 billion. He also added that the exports are growing in new markets like Africa, Latin America and Asia, which has helped India maintain the export growth momentum. The US and Europe which are the two biggest markets for Indian merchandise, accounting for about 30% of total shipments have witnessed a decline. The Indian exports to the two nations until, 2004-05 used to account 40%, but in the last six years it has declined to 30%.
The sectors that which saw a huge growth in imports included, petroleum products (42%) at $70.4 billion, gold and silver (80%) at $31.1 billion. Imports of iron and steel were depressing at a growth of 3% to $5.6 billion.