Merchandise exports up 18.07% in May

Growth in merchandise exports fell to 18.07 per cent in May from 23.06 per cent in April, according to provisional data released by the commerce ministry today.

Though this is significantly slower than the 30 per cent growth recorded in May 2006, it marks the third consecutive month of double-digit growth since March 2006 despite an appreciating rupee. Export growth had slipped to single digits between December 2006 and February.

However, Commerce Minister Kamal Nath has sounded a note of caution on account of the rupee's appreciation.

"We will see the real impact of the rupee's appreciation from July when new orders get reflected in the data. Exporters are already reporting losing orders and business."

Earlier, the commerce ministry had ramped up the export target for 2007-08 to $160 billion, up a third from last year's $120 billion. With the rupee gaining 9 per cent against the dollar since the beginning of the financial year, there is a rising feeling that this year's export target may not be reached.

Exports stood at $11.86 billion in May, against $10.4 billion in the same month last year.

However, imports grew 26.36 per cent from $14.30 billion to $18.07 billion, resulting in a higher trade deficit of $6.21 billion in May 2007.

The gains made by the rupee have, however, helped the country's importers. The import of oil during the month dipped 2.99 per cent to $4.77 billion, while non-oil imports grew 41.58 per cent to $13.33 billion. This, trade experts said, was an indication of the country's robust economic growth.

To cushion the impact of a rising rupee, the commerce ministry has asked the finance ministry to enhance the duty drawback rates by 5 per cent.

In addition, it has asked for making the exchange earners foreign currency accounts interest bearing as well as reduction of interest on pre-shipment and post shipment credit.