The economic slowdown and the contraction in world trade has started taking toll of India’s overseas shipments with exports registering the sharpest fall off 14.8 in the last three years declining to $22.4 billion putting a question mark on achieving the $350 billion target this fiscal.

The demand for Indian goods has gone down dramatically in its traditional markets of U.S. and Europe that are showing no signs of reviving. "The world trade contraction is getting worse. The worst fear of European sovereign debt crisis is really impacting the world trade. The appetite for Indian goods has come down substantially in the U.S. We are faced with tough times in the coming days," Commerce Secretary S.R. Rao told reporters in New Delhi.

The continued slide in the economic growth also had its reflection in the numbers with imports declining by 7.61 per cent to $37.9 billion in July, leaving a trade deficit of $15.5 billion. During the April-July period of 2012-13, exports have shrunk by 5.06 per cent to $97.6 billion. Imports dipped by 6.47 per cent to $153.2 billion during that period. The last time when exports slid to such a level was in August 2009 when exports dipped by 23.5 per cent.

Asked whether the government is planning to provide more incentives to exporters, Mr. Rao said there is a need to take more steps to reduce transactions cost of exports to increase competitiveness of Indian goods in the global markets.

Planning Commission Deputy Chairman Montek Singh Ahluwalia said the global economic situation is a cause of worry. "The global economy is not looking good. Prospects for Europe in the current year indicate zero growth with negative in some countries. I think all countries including India are facing global environment that is not supportive. Trade deficit does pose a challenge," he said reacting to decline in exports growth.

Engineering exports, which contribute about one-fourth to the country's total exports, in July declined by 16 per cent, while during April-July, it was down by 9 per cent. Similarly, petroleum exports in the month under review dipped by 19.4 per cent and 16.52 per cent during the first four months of this fiscal. Petroleum imports contracted by 5.52 per cent in July. However, these grew by 2.76 per cent in April-July 2012.

Director-General of Foreign Trade Anup Pujari said sectors like cotton yarn, leather, spices, marine products and tea have shown positive growth during the first four months of this fiscal. "Out of 26 exporting sectors, which were tracked by the Ministry, six have shown positive growth, 17 have shown mixed trends and three have shown negative growth consistently," he said.

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