With exports falling for six consecutive months, the Government has itself now raised a question mark over whether the annual export target of $360 billion for the current fiscal will be achieved.
Alarmed by the widening trade deficit, which has hit a record high of almost $21 billion, Government sources indicate that measures to boost exports may be announced soon.
According to Commerce and Industry Minister Anand Sharma, there is serious concern that the export target is unlikely to be met. The only bit of good news from the overall disappointing trade data is that exports are no longer shrinking at the rate they were.
The rate of fall in exports in October, at 1.6 per cent, was much lower than the 11 per cent dip recorded in September.
But since imports went up by over seven per cent, this has widened the trade deficit to a new high of over $20 billion. Widening of trade deficit is another bit of bad news for an already fiscally stressed economy, where the Government intends to keep the current account deficit at 3.7 per cent of GDP.
Commerce Secretary S.R. Rao said that the Directorate General of Foreign Trade (DGFT) is reviewing the performance of different segments of the export sector.
“The DGFT has done an extensive consultation with all the stakeholders. I think the review will be completed in the next two days,” he informed.
He also said after the analysis of the export sector, the Minister will take a call on whether there is any requirement of mid-term review of the Foreign Trade Policy (FTP) and if specific steps are needed to boost exports. When asked if the Government would provide some support to exporters, the Secretary replied “of course”.
Rao felt, “World trade is continuously contracting. Our integration with the world trade has increased so any ripple worldwide will impact India’s trade.” On the increasing import bill, he said it has risen due to a jump in gold and petroleum imports.
President of exporters’ body FIEO Rafeeque Ahmed said, “Trade deficit is highest in recent times due to hike in oil imports.”
Oil imports in October increased by 31.6 per cent to $14.78 billion. However, non-oil imports declined by 1.73 per cent to $29.42 billion.
Meanwhile, Ahmed felt that the arrest of decline in exports in October points to recovery.
“We would be seeing positive growth in exports from next month which may show double digit growth from January onwards or even earlier,” he added.