Trend expected to halt soon, incentive package sought.
Despite the key US and European markets going through a slowdown, Indian exports continued their upward journey in August, rising 44.2 per cent year-on-year to hit $24.3 billion. Imports also grew 41.8 per cent to cross $38.4 billion. However, the growth in both exports and imports has decelerated.
In July, exports grew 82 per cent over the same month last year. Compared to July, exports in August declined 17 per cent from $29.34 billion and imports fell 5 per cent from $40.42 billion. During April-August, exports totalled $134.50 billion, up 54.2 per cent against the corresponding period last year. Cumulative imports grew 40.4 per cent to $189.40 billion, increasing the trade deficit to $54.90 billion, according to initial estimates released by commerce secretary Rahul Khullar here on Friday.
Indian exporters have been tapping newer markets such as West Asia, Africa and South America.
“The cumulative growth in exports during April-August is not something historic, there have been earlier instances of more than 50 per cent growth in a five-month period on a low base. The more important issue is whether such growth would last or not. And this will not. The growth all this while has been so robust because we are now exporting to some of the faster moving economies. But September onwards, this would come down,” said D K Joshi, principal economist, Crisil.
| PRODUCT-WISE CONTRIBUTION | |
| EXPORTS | April-August ($ bn) |
| Engineering products | 39.60 |
| Petroleum and oil products | 24.20 |
| Cotton | 2.70 |
| Electronic goods | 4.70 |
| Ready-made garments | 5.75 |
| IMPORTS | April-August ($ bn) |
| Petroleum and oil products | 52.20 |
| Gold and silver | 26.30 |
| Machinery | 15.00 |
| Electronic goods | 13.60 |
| Organic and inorganic chemicals | 30.00 |
| Coal | 7.00 |
| Source: Commerce ministry | |
The trade deficit in August reached $(-)14.1 billion compared to $(-)11.08 billion in July and $(-)7.66 in June this year.
According to Khullar, imports are rising at a faster pace than exports, mainly due to the import of petroleum and other oil products. The official trade data are expected to be released on October 3.
“The high trade deficit is definitely a cause for concern and the government should ensure a level playing field to domestic manufacturers to effectively compete with imports,” said Ramu S Deora, president, Federation of India Export Organisations (FIEO).
However, exporters believe this growth is not going to sustain for long, especially with the withdrawal of the Duty Entitlement Passbook (DEPB) scheme, a popular duty reimbursement scheme that compensates exporters for the customs duty they pay on shipments.
Khullar said the government should intervene in assisting exporters because such a high growth rate was bound to come down. He urged the finance ministry to approve an incentive package for exporters.
During the five months of 2011-12, products whose exports did well were engineering ($39.6 billion), petroleum and oil products ($24.2 billion), cotton ($2.7 billion), electronics ($4.7 billion), and ready-made garments ($5.75 billion).
On Thursday, commerce minister Anand Sharma had met finance minister Pranab Mukherjee to introduce an all-encompassing duty drawback rate that would offset the losses faced by exporters with the termination of the DEPB scheme.
The government has set a target of achieving 25 per cent growth annually so that exports touch $500 billion in 2013-14.
