Demand contraction in traditional markets is hurting shipments
Amid weak economic sentiment and falling industrial output, India, on Thursday, reported a 4.16 per cent drop in its exports at $25.68 billion in May, mainly due to slump in global demand and slowdown in domestic industrial growth. Imports also fell by 7.36 per cent to $41.9 billion. The trade deficit also narrowed to $16.3 billion during the month, from $18.5 billion a year ago. “We have also seen the IIP (index of industrial production) numbers. So, you can correlate the reasons why exports have not done too well…we are recalibrating strategy to meet an ambitious 20 per cent growth target in exports for the current fiscal,” Commerce Secretary S. R. Rao told journalists here.
He pointed out that contraction of demand in India's traditional markets, particularly in eurozone economies, was hurting exports.
“We are still not out of the woods...bailing out of Greece and Spain is still a work in progress. We are working with industry to find ways to tackle the difficult economic situation globally. We need to look at alternate markets. The ASEAN region is showing positive signs…then there is Africa and Latin America. These are markets, where, I think, we need to look more intensively...internal work is in progress,” Mr. Rao added.
In May, decline in exports was mainly in petroleum products (- 26.07 per cent), engineering goods (- 15.67 per cent), gems and jewellery (-9 per cent) and readymade garments (-15.82 per cent). On the import front, gold and silver was down by about 51 per cent, while plant and machinery dropped by 8 per cent. However, imports of crude oil were up 14 per cent.
Commenting on the export figures, Federation of Indian Export Organisations (FIEO) Chairman Rafeeque Ahmed said the next few months would be challenging. But with a little stability in the eurozone, exports would be back. “Exporters should explore new markets and new buyers in the existing market to take full advantage of depreciation of rupee while simultaneously increasing their productivity through efficiency and cost cutting measures as a long term strategy to survive in world market,” he added.