With the appreciating rupee continuing to impact the economy, country’s export during July this year managed only an marginal rise of mere 3.1 per cent.

However, in dollar terms, India’s exports increased by 18.52 per cent to $12.49 billion in July from $10.54 billion in the same month last year, analysis of latest trade data released by the commerce ministry shows.

On the other hand, imports in July grew by 20.40 per cent to $17.50 billion as against $14.54 billion in the corresponding month last year. Due to appreciation of rupee, imports in rupee terms grew by 4.74 per cent in July this year.

On cumulative basis during April-July period of the current fiscal, exports grew by 18.22 per cent to $46.79 billion from $39.58 billion in the corresponding period of the previous fiscal. Imports during April-July this fiscal increased by 30.65 per cent to $72.41 billion from $55.42 billion.

Accordingly, the trade deficit widened to $25.61 billion during April-July this fiscal from $15.84 billion in the same period of the previous fiscal. “Export growth of over 18 per cent shows resilience of our exporters who are able to compete in world market against all odds,” said Commerce Minister Kamal Nath.

On sequential basis, exports growth during July is higher than 14 per cent in June this year. However, as departmental stores in Europe and the US buy products for Christmas season well in advance, exports in July are usually higher. Mr Kamal Nath expressed confidence that despite a slow down, the export target of US$160 billion for this fiscal would be met.

Centre’s bid
In the wake of rupee appreciation the Centre in a bid to give relief to exporters has announced a Rs 1400-crore package, including increased rates of duty drawback with effect from April 1.

The Centre has also asked banks to extend cheaper credit to exporters at an interest rate not exceeding BPLR minus 4.5 per cent on pre-shipment credit up to 180 days and post-shipment credit up to 90 days on the outstanding amount for period between April 1 to December 31 this year.

Besides, the finance ministry has accorded relaxation from monthly and quarterly ceilings of expenditure for deemed export benefits to enable the commerce ministry to meet the pending reimbursement claims, which are estimated to be in the order of Rs 600 crore.

The increased rate of duty drawback on nearly all products would cost the exchequer Rs 800 crore while, the government would bear another Rs 600 crore to provide two percentage point subvention to banks for providing concessional credit to exporters in certain sectors.

The finance ministry has also announced measures for exporters in textile, ready made garment, leather exports, handicraft, engineering products, processed agriculture products, marine products, sports goods, toys and all SME sectors.

Hike in interest rates
However, trade analysts say the combination of rising rupee and successive hikes in interest rates has affected the sentiment of exporters at the ground level.

The rupee has risen nearly 10 per cent since late 2006, making a dent on the revenue and profitability of many export-oriented sectors like IT and textiles.

Non-oil imports increased at a much faster pace of 25.86 per cent to $12.46 billion in July, than oil imports of $5.04 billion, which grew by 8.75 per cent.

For cumulative period of four months, the non-oil imports saw a huge jump of 43.73 per cent to $52.53 billion, against an increase of only 5.33 per cent in oil imports for these months.