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

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. The last time when exports slid to such a level was in August 2009 when shipments dipped by 23.5 per cent. Mr. Rao said it would be a difficult task to achieve the export target of $350 billion set for the current fiscal. Asked whether the government is planning to provide more incentives to exporters, he said there was 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 was 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 the 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.

The Director-General of Foreign Trade, Anup Pujari, said sectors such as cotton yarn, leather, spices, marine products and tea had 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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