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India’s merchandise exports grew by only 3.8 per cent in January, the third month in a row of a single-digit rise. It got the Union government’s commerce department to say it might be tough to meet the official export target of $325 billion for 2013-14, though, it added, it was confident of achieving this.
Exports for January were $26.75 billion (Rs 1.7 lakh crore); cumulative exports touched $257 billion in the first 10 months of the current financial year against $243 billion in the corresponding period of 2012-13. This means the country will have to export $67 billion of goods in February and March to meet the export target for 2013-14.
Imports contracted 18.1 per cent in January over the same month a year before, to $36.7 billion compared to $44.75 billion in January 2013. This narrowed the trade deficit for the month by almost half over a year, to $9.9 billion compared to $19 billion. “We should be in the realm of $325 billion (of exports for the full financial year). It is a tough call but we should be able to achieve it. This figure will improve, we hope, in March,” commerce secretary Rajeev Kher told journalists. Exports had declined to $300 billion over 2012-13, compared to $306 billion in 2011-12.
After growing in double digits for four months in a row till October, exports have been rising only in single digits since then.
Two items which pulled down export growth in January were gems & jewellery and oil refinery products. While export of the former fell 13.1 per cent, those of petroleum, oil and lubricants declined 9.4 per cent.
A note from ratings agency CRISIL said, “Export growth might have been capped by a continued fall in the value of petroleum exports in the month, as crude oil prices averaged $107.4 a barrel in January as compared to $112.9 a barrel at the same time last year.”
Besides, experts said, import curbs on gold led to a fall in its import. Those of gold and silver were down 77 per cent to $1.7 billion in January versus $7.5 billion in the same month last year.
Kher said the commerce department had sought a relaxation in the restrictions on gold import. Earlier, gems and jewellery traders had met Sonia Gandhi, head of the coalition ruling at the central government, to press the same thing. She had forwarded their demand to commerce and industry minister Anand Sharma. Finance Minister P Chidambaram had assured a review of the curbs on gold import by the end of the financial year, if the CAD improved.
Some items rose among the export basket. Engineering goods rose 37 per cent , rice 22.9 per cent, marine products 13 per cent, iron ore 18 per cent and readymade garments by 17.4 per cent.
“The engineering sector is clearly leading the rebound in India’s overall exports. We have remained cost-competitive," said Anupam Shah, chairman of the Engineering Export Promotion Council.
The low export growth in January was even as our major trade partners, America and Europe, have been showing encouraging signs of economic revival. The US economy clocked 4.1 per cent and 3.2 per cent growth in the third and fourth quarters of 2012-13, respectively. The widely-tracked HSBC Purchasing Managers’ Index showed output in the Euro zone expanded for a seventh successive month in January. At 52.9 points, the PMI had its highest reading since June 2011.
On the brighter side, a note from YES Bank says our export growth in January outperformed some Asian peers. For the month, export growth in Taiwan declined 5.3 per cent year-on-year, from a 1.9 per cent decline in December. The estimate for China (Bloomberg consensus) is a flattish 0.1 per cent over a year, compared to growth of 4.3 per cent in December.
As for imports, those of petroleum products declined 10.1 per cent to $13.2 billion in January, whereas non-oil import fell 22 per cent to $234.8 billion. The huge fall in this category does not augur well for industrial activity. After falling for October and November, industrial production data for December would come on Wednesday.
Imports for the first 10 months of the financial year contracted 7.8 per cent to $377 billion against $409 billion in the corresponding period of 2012-13. This left a cumulative trade gap for these months at $120 billion against $165.8 billion in 2012-13 — a warning on industrial activity but it would compress the current account deficit.
The latter had risen to a record 4.8 per cent of gross domestic product in 2012-13 and was 4.9 per cent in the first quarter of 2013-14. However, it fell to 1.2 per cent in the second quarter. In the first half of the current financial year, the CAD was 3.1 per cent of GDP.
