Exports rise 10% to $25.4 bn in Jan imports up 20%

Balance of trade for 2011-12 could be minus $160-165 bn, says commerce secretary

Exports in January rose 10.1 per cent to $25.4 billion after dismal, single-digit growth in November and December. The growth in January was primarily due to depreciation in the rate of the rupee during October and November, the impact coming with a lag.

Imports rose 20.3 per cent to $40.1 billion, leaving a trade deficit of $14.7 billion.

Taking the January numbers into account, total exports during the first 10 months of the current financial year stood at $242.8 billion, up 23.5 per cent over the corresponding period of the previous financial year. Imports also surged 29.4 per cent to $391.5 billion in the April-January period, resulting in a trade deficit of $148.7 billion.

“In January, we can see imports are slowly coming down as the exchange rate kicks in, and imports are likely to decline further. I think this deceleration of imports in February will be more pronounced in February. At this rate, I am hopeful we might reach the target of $300 billion in exports and imports at $460 billion for the entire financial year, while the balance of trade could reach $160-165 billion,” commerce secretary Rahul Khullar said, while releasing the initial trade numbers for January. The official data would be out on March 1.

He said the current account deficit (CAD) — the trade deficit excluding the deficit in trade in services and a few other items — for this financial year would stand at 3.5 per cent of the gross domestic product (GDP), the highest since the 1991 balance of payment crisis. During the first half of this financial year, the CAD stood at $32.7 billion, 3.6 per cent of the GDP.

Khullar also ruled out any incentive package for exporters in the coming Budget in the wake of the demand slowdown in the traditional markets of Europe and the US, which has severely hit Indian exports.

“We have a tight fiscal and inflationary situation at the moment. The situation in 2012-13 is going to be worse,” he said, adding imports might remain buoyant due to the high prices of crude oil, fertilisers and vegetable oil. Machinery and electronic imports would come down further in the coming months, as the bulk of it goes to the European markets, he said. However, the import of crude oil and fertilisers would continue to grow.

Exporters have urged the government to reduce the cost of credit for all export sectors. They have also demanded a provision of interest subvention of more than three per cent to bring down the export credit to seven per cent. According to M Rafeeque Ahmed, president, Federation of Indian Export Organisations, the trade deficit might balloon to $170 billion, as crude prices are moving northward and imports of gold and silver rise.

“Indian exports have always been demand-driven. The situation is only going to worsen now, as the world economy continues to remain unhealthy and the government here is now focused on fiscal consolidation. The subsidy bill has already overshot. So, all these factors do not spell well for exports, as far as giving any incentive is concerned,” said Rupa R Nitsure, chief economist, Bank of Baroda.

During the April-January period, the export engineering products rose 21 per cent to $49.7 billion, petroleum products $48.9 billion, gems and jewellery $37 billion and ready-made garments $10.9 billion. In the imports segment, petroleum products reached a whopping $117.9 billion, gold and silver $50 billion, machinery 28.8 billion and electronic goods $27.8 billion.