India's merchandise exports increased 21 per cent year-on-year to $303.7 billion in 2011-12.
Thus, despite weak demand in traditional export markets such as the US and the European Union, shipments crossed the $300-billion official target set for the fiscal.
Meanwhile, imports in 2011-12 soared 32.1 per cent to $488.6 billion, resulting in a record trade deficit of $184.9 billion, according to data released by the Commerce Ministry on Thursday.
SERIOUS CONCERNS OVER TRADE DEFICIT
Petroleum imports were the main component in the import basket, registering 46.9 per cent growth at $155.6 billion. This was $50 billion higher than the previous fiscal.
The other major imports were of gold and silver, which rose 44.4 per cent to $61.5 billion. This was $19 billion more than in 2010-11.
Together, these two sectors (petroleum and gold and silver) accounted for a $69-billion increase in imports over 2010-11 levels.
Apart from these, huge increases were seen in imports of coal, from $9.8 billion in 2010-11 to $17.6 billion in 2011-12, accounting for a $7.8-billion increase (80.3 per cent growth).
Fertiliser imports grew from $6.8 billion to $11 billion during the period under review, registering an increase of $4.2 billion (59 per cent), while edible oil imports jumped from $6.5 billion to $9.6 billion, an increase of $3.1 billion (47.5 per cent).
These three sectors accounted for an additional $15 billion in the import bill.
Pointing to this pattern, the Commerce Secretary, Dr Rahul Khullar, told presspersons that the issue of huge imports have to be dealt with urgently. The trade deficit, which is the highest ever, is a serious concern, he said.
It is important for the nodal ministries (coal, fertiliser and edible oil) to take policy decisions immediately to address this issue, he added.
Meanwhile, machinery imports, including capital goods, registered 27.7 per cent growth at $35.4 billion, while electronics goods imports were worth $32.7 billion (23.2 per cent).
CURRENT ACCOUNT DEFICIT
Owing to the huge trade deficit, the country's current account deficit (CAD) is likely to be close to an "uncomfortable" 4 per cent of GDP in 2011-12, Dr Khullar said.
A country runs a CAD when its total imports of goods, services and transfers is more than its total export of goods, services and transfers, in turn making it a net debtor to the world.
The Prime Minister’s Economic Advisory Council had projected CAD for 2011-12 at 3.6 per cent of GDP (or $66.8 billion). This is even higher than the CAD of 3.1 per cent of GDP in 1990-91, when the country was hit by a balance of payments crisis.
The Government usually relies on partially bridging the deficit on the trade (merchandise goods) account with a surplus in ‘invisibles’ earnings from remittances, software and other services exports. However, with the trade deficit touching $184.9 billion, the CAD for 2011-12 would be higher than expected.
SECTOR-WISE EXPORTS
The engineering sector was the main contributor to the country's exports basket in 2011-12, accounting for $58.2 billion (an increase of 16.9 per cent), followed by petroleum products, registering a 38.5 per cent increase to $57.5 billion.
Gems and jewellery exports grew by 13.3 per cent to $45.9 billion. Readymade garments ($13.7 billion), man-made yarn and fabrics ($5.1 billion) as well as cotton yarn and fabrics ($7.2 billion) all performed well by growing at 17-18 per cent.
Electronics exports were worth $9 billion (9.2 per cent growth), while drugs and pharmaceuticals exports jumped 21.9 per cent to $13.1 billion.
OUTLOOK FOR EXPORTS, IMPORTS
Dr Khullar said 2012-13 is going to be a difficult year for trade given the global slowdown.
"The export market effectively collapsed from September 2011 onwards," he said. Exports in March 2012 have fallen to $28.7 billion from $30.9 billion in 2010-11.
However, for the first time since September 2011, exports increased on a month-on-month basis in March 2012.
There is a lag effect kicking in and this is an indication that there will be a faster revival in the first quarter of 2012-13, Dr Khullar said.
On imports, he said, gold imports are expected to come down due to the duties imposed in the recent Union Budget.