Imports have also fallen showing a growth of just 4.69 per cent in April-August to touch $ 14.9 billion as compared with 37 per cent in the same period last year. Significantly, non-oil imports during April-August 1996 actually declined by 3.2 per cent as compared with the same period last year.
Worried by the fall, a meeting of senior officials of commerce ministry yesterday focused on the reasons underlying the dismal trade performance and the required policy responses to reverse this trend.
Among the main reasons identified are the overall sluggish trend in global trade, the "perennial infrastructure problem" and the high cost and limited availability of credit. The Reserve Bank of India has not tackled this problem despite repeated pleas from the ministry and exporters, sources argued.
Shyamal Ghosh, director general of foreign trade (DGFT), said: "The ministry is worried over the decline and is looking at steps to reverse it".
Starting with a core group meeting of the executive wing of the Board of Trade today, the ministry plans to hold an EXIM policy review meeting to be held on October 23-24. Based on this, more items are likely to be moved to special import licence list to boost the premium and increase the incentive for exporters.
Last month, faced with the fall in export growth rate from 14-15 per cent to 11 per cent, the ministry had extended the SIL benefit to small exporters.
Further, several items like paints, varnishes and lacquers for which a large number of import licences were sought were moved to the SIL list. This is expected to boost the premium on SILs by increasing the demand for SILs.
Sources said the export growth in April-July 1994-95 was just 8.45 per cent and over that showing a growth of 29 per cent in 1995-96 was possible due to the low base. This is not the case this year.
Sources said several countries like China and the Asean tigers had registered export growth rates of nil and single digits respectively and the trend was catching on here.
A ministry release says that global exports are expected to rise by 5 per cent this year compared with 7.8 per cent last year.
Item specific exports were also examined by the ministry. The decline is mainly in three items - gems and jewellery, iron ore and leather. There has been a decline in the international prices of rough diamonds which has hit the value realisation of India's exports also.
Leather exports have suffered with the Supreme Court's orders of closure of tanneries. There is no clear explanation for the fall in iron ore exports, said sources.
Sources said that contrary to what exporters were saying, the export promotion capital goods (EPCG) scheme has performed marginally better in April-June this year over the same period last year.
Exports during August 1996 is 2.38 per cent higher than August 1995. The trade deficit during April-August 1996 is estimated at US $ 1.4 billion, which is lower by $ 500 million over April-August 1995 but is $ 350 million and odd higher than the deficit last month. The sharp fall in rate of growth of exports in August has exceeded that of imports leading to a higher trade deficit.
