India’s merchandise exports continued to record a meagre growth with shipments in January 2012 increasing just 10.1 per cent year-on-year to $25.4 billion due to poor overseas demand especially in the traditional markets such as Europe.
This export performance was marginally better than the 3.87 per cent growth in November 2011 and 6.7 per cent in December 2011.
However, releasing the provisional data on Thursday, the Commerce Secretary Dr Rahul Khullar said the global economic uncertainties, especially the Euro zone crisis, as well as the lack of confidence among consumers and investors will continue to impact India’s exports even in 2012-13.
Dr Khullar, who is slated to take charge as India’s new ambassador to the European Union soon, said, “There is still a shroud of uncertainty as to whether Europe is out of the woods yet or not.”
Referring to the huge fiscal deficit, Dr Khullar said it would be difficult for the Government to provide sops for exporters due to the “tight fiscal situation”.
Therefore, “2012-13 is going to be tough and if exporters manage 20 per cent growth in 2012-13, it will be damn good,” he said.
Month-on-month export growth this fiscal had shown a clear deceleration till November from a peak of 82 per cent in July.
RECORD TRADE DEFICIT
Meanwhile, imports in January 2012 rose much faster at 20.3 per cent to $40.1 billion, leaving a trade deficit (export-import gap) of $14.7 billion.
“Imports are still buoyant because of high prices of crude oil and vegetable oil,” Dr Khullar said, adding that “Trade deficit in January is large but my guess is that it will narrow down in the next two months.”
Exports in the fiscal so far, which is during April 2011-January 2012, grew by a robust 23.5 per cent to $242.8 billion. On the other hand, imports during the ten-month period surged by 29.4 per cent to $391.5 billion, leaving a trade deficit of $148.7 billion.
“What you are looking at now, is exports for the fiscal of around $295-305 billion, imports at about $460 billion with a balance of trade of about $160 billion,” he said.
With a record high trade deficit of $160 billion for 2011-12, the current account deficit would be around 3.5 per cent of the GDP, according to the Commerce Ministry.
SECTOR-WIDE DETAILS
At the disaggregated level, engineering exports led the pack recording a 21 per cent growth during April 2011-January 2012 to touch $49.7 billion. Petroleum products exports grew by 50.1 per cent to $48.9 billion during the ten-month period, while gems and jewellery increased 33 per cent to $37 billion.
The other main sectors include: ready-made garments (21.5 per cent to $10.9 billion); electronics (13.4 per cent to $7.3 billion); drugs and pharmaceuticals (21.1 per cent to $10.2 billion); basic chemicals (29.6 per cent to $8.8 billion); leather (23.4 per cent to $3.8 billion); cotton yarn and fabric made-up (14.7 per cent to $5.59 billion).
Meanwhile, the main components of the import bill included: petroleum products which recorded a 38.8 per cent jump to $117.9 billion; gold and silver (46.6 per cent to $50 billion), machinery (25.8 per cent to $28.8 billion), electronics (22.9 per cent to $27.8 billion), chemicals (23.6 per cent to $15.8 billion); coal (69 per cent to $14.1 billion), iron and steel (12 per cent to $9.9 billion), fertilisers (46.5 per cent to $9.35 billion); and vegetable oils (47 per cent to $8 billion).
FIEO REACTION
Reacting to the trade data, Mr M Rafeeque Ahmed, President, the Federation of Indian Export Organisations, said the trade deficit may touch $170 billion in view of the rising crude prices and growing imports of gold and silver.
Mr Ahmed suggested that the Government should look at ways to make exports competitive by reducing the cost of credit across the board for export sector or providing interest subvention of over 3 per cent to bring the export credit to close to 7 per cent.
Various tax matters including TDS (tax deducted at source) on foreign agency commission needs to be clarified to remove ambiguities and impart competitiveness, he said.