Even as the Commerce Ministry warned exporters of a possible downslide in exports in the coming months, India's exports registered a steep 81.8 per cent year-on-year growth at $29.3 billion in July due to the sterling performance of sectors such as engineering, petrochemical products and gems and jewellery.
Stating that the present growth rate was not sustainable in the long run, Commerce Secretary Rahul Khullar told reporters here that uncertainty in the U.S. and euro zone economies posed a big challenge to Indian exporters. “Exports have done well. But my sense is that high growth is not to be sustained. We should see growth rate slipping immediately after August-September,” he said.
On the other hand, imports, too, increased by 51.5 per cent to $40.4 billion, leaving a trade deficit of $11.1 billion. In July, engineering, petroleum products and gems and jewellery exports were worth $8.7 billion, $4.6 billion and $3.5 billion, respectively. In July, imports of petroleum and oil lubricants stood $11.45 billion. Imports of pearls and semi-precious stones, gold and silver stood at $3.7 billion.
During April-July 2011-12, shipments of products grew by 54 per cent to $108.3 billion. Though most of the sectors posted robust growth in export volumes, Mr. Khullar cautioned the exporting community not to get carried away by these high numbers and rather brace themselves up for the challenges ahead as the “summer is not over”. Uncertain economic conditions in the U.S. and Europe are likely to hit global demand. Together, these countries account for about 35 per cent of the country's exports.
During the first four months of the fiscal, imports grew by 40 per cent to $151 billion, led by inbound shipments of petroleum products worth $42 billion, an increase of 23 per cent year-on-year. The trade deficit during the period stood at $42.7 billion.
Mr. Khullar also said that hike in interest rates had mainly hit small and medium enterprises. “People of SME sector have been complaining to me and that I am trying to do something on that,” he said.
On trade deficit, Mr. Khullar said that on an average monthly trade gap stood at about $10.75 billion. Going by this, the trade deficit might touch $130 billion in 2011-12. “If you do not fix your balance of trade problem, you are going to have a difficult issue,” he said.
Talking about demand in the new markets, he said exports were registering good growth in new markets like Latin America and Africa. “In Africa, we are doing extremely well. Numbers are almost more than double. The country today is better equipped than in 2008 to face any further slowdown. We are far more aware that where the shoe is going to start pinching. We know what the warning signs are and where to look. We recognise that it is going to hurt us,” he added.
When asked whether the government's strategy to double exports to $500 billion by 2014 is on the right track in the wake of global economic situations, Mr. Khullar said: “The strategy we embarked on two years ago was reasonably sensible and pragmatic. It seems to have worked. If it is working why you want to change it,” he asked.
Commenting on the development, Federation of India Export Organisations (FIEO) said: “The growth of 81.8 per cent in exports is unheard of in recent history”.
FIEO President Ramu S. Deora said the problem at the domestic front with hike in interest rates for exports and uncertainty over continuance of DEPB (Duty Entitlement Pass-book) scheme had further accentuated the problem.
During the April-July period, sectors which registered healthy growth in exports include engineering, petroleum products (60 per cent), readymade garments (40 per cent), electronics (84 per cent), chemicals (63 per cent) and plastics (51 per cent). Export sectors which are not doing well during the period include tobacco, iron ore and fruits and vegetables.
During the period, pearls and semi-precious stones increased to $11.16 billion, machinery (45 per cent), electronics (75 per cent), and chemicals (19 per cent).
