The Government expects exports to grow between 10-15 per cent during this financial year. It is lower than the nearly 21 per cent growth during 2011-12.
Meanwhile, the good news is that the trade deficit may be lower for the current fiscal. This is because of lower import of crude oil along with gold and silver. However, the situation in textile export is not very encouraging.
The Commerce Secretary, Dr Rahul Khullar, said, "April growth rate of 3.2 per cent shows that there is demand concern. Though India is getting an edge in engineering and chemical exports, bad news is about export of readymade garment, made-ups and cotton yarn."
Export was down by over 5 per cent in March.
Interestingly, import in April was lowest during last 12 months (May, 2011-April 2012). Import grew over 3 per cent in comparison to nearly 25 per cent in March 2012.
Textile Export
Explaining about the textile sector, he mentioned that export is in negative because of lower demand for garment, but same cannot be said about cotton yarn. As there was a ban on cotton yarn till March 2011, there was sudden surge in cotton yarn exports in April last year. "So, downward trend in cotton yarn export during April 2012 can be seen as one-off," Dr Khullar added.
He admitted that the situation in textile sector is not good. There is an issue of financial viability and capital stress. This sector has two components and both have their own issues. Spinning industry is a capital intensive one while garment industry is labour intensive. So change in demand affects the garment sector while any capital issue hurts the spinning one, the secretary said.
Gold and Silver import
Jewellers’ agitation over budgetary provision brought down the gold and silver import. However, the dip of 33 per cent is slightly on higher side. It is expected that growth will not be much high.
Impact of rupee depreciation
Dr Khullar said that with the weakening rupee, demand for import will be affected. However, we will have to wait for the number for first quarter (April-June) to reach a conclusion. In fact, June number will be more important, he added.