India’s merchandise exports and imports are now in distinct slowdown mode with September trade figures establishing the trend that began in August.
Exports in September grew only at 36.3 per cent to $24.8 billion, while imports increased just 17.2 per cent to $34.6 billion.
Compared to this, exports in July had soared almost 82 per cent, while the growth had slowed down to 44.25 per cent in August. Import growth in July was 51.52 per cent and it had decelerated to a 41.82 per cent growth in August.
The deceleration in exports was mainly due to a fall in demand in traditional markets such as the US and the European Union. “Exports continue to grow over last year, but the heady numbers have gone, it is clear there is deceleration. That is the surest sign of times to come,” the Commerce Secretary, Dr Rahul Khullar, told reporters while releasing the trade data on Wednesday.
Noting that the economies of the US and European Union (together accounting for 30 per cent of India's exports) are still in trouble, Dr Khullar said, “Japan is not in great shape, China is slowing, Brazil also has problem. So the prognosis for the next six months is a slowdown in export growth.”
First-half numbers
However, exports are on track to touch the $300 billion-target for 2011-12 as cumulative exports during April-September 2011 have already touched $160 billion at a growth rate of 52.1 per cent, he added. Exports in 2010-11 were $245.9 billion.
Meanwhile, imports increased 32.4 per cent to $233.5 billion during the first half of this fiscal, widening the trade deficit to $73.5 billion.
The increasing trade deficit is “clearly not good news,” Dr Khullar said, adding that at this rate, it could be anywhere between $133 billion and $147 billion for 2011-12 and indicated that it could have an impact on the country’s external balance of payments position if there are not enough capital inflows.
Barring iron ore, tobacco and fruits and vegetables, all other items in the export basket registered a positive growth during April-September 2011.
The main drivers of exports during the first six months of this fiscal were sectors such as: engineering (103 per cent growth to $46.4 billion), electronics (66.7 per cent to $5.7 billion), chemicals (64 per cent to $6.2 billion), petroleum products (53 per cent to $27 billion), drugs and pharmaceuticals (33 per cent to $6.5 billion), readymade garments (32 per cent to $6.8 billion) and gems and jewellery (23 per cent to $18.5 billion).
On the other hand, the main components of imports during the first half of this fiscal were: petroleum products (42 per cent to $70.4 billion), gold and silver (80 per cent to $31.1 billion), machinery (34 per cent to $17.4 billion, electronics (33 per cent to $16.9 billion), coal (43 per cent to $8.4 billion), vegetable oil (60 per cent to $4.9 billion) and pearls, gems and jewellery (9 per cent to $15.7 billion).
Imports of iron and steel grow only by 3 per cent to $5.6 billion, while that of fertiliser posted a negative growth of 7.8 per cent to $3.9 billion. Imports of transport equipment also posted a negative growth.
Mr Ramu S. Deora, President, Federation of Indian Export Organisations, said he is hoping that in the supplement to the foreign trade policy to be announced by the Commerce, Industry and Textile Minister, Mr Anand Sharma on Thursday, the Government will provide relief to labour-intensive export sectors and accelerate its market diversification programme by bringing in more markets under it. He said that due to the slowdown in the third and fourth quarters, total exports during the current fiscal would be only around $280 billion.