“The outlook for exports in 2008-09 may not be as bright as in the past few years with lower projections in world GDP and world imports and exchange rate developments,” it said.

India’s exports stood at $111 billion in April-December 2007, registering a growth of 21.6 per cent. But it may fall short of $160 billion export target for the year.

Twin developments

It said two developments that need to be monitored are the fall in export growth to the US in general and fall in textile exports in particular to the US and EU.

“Though exports to the US have already been slowing in 2006 and 2007, a further slowdown may be unavoidable, but may be relatively modest. The slower Indian economic growth in 2007-08, relative to 2005-06 and 2006-07, may also have a temporary dampening effect on capital inflows,” it said.

Emphasising the need for “some fundamental policy changes besides relief measures already given,” it suggested measures for merchandise trade sector. The measures include continuation of reduction in customs duty resulting in low import duty, weeding out of unnecessary customs duty exemptions, abolishing export schemes that are redundant with fall in import duties and streamlining existing schemes. For services trade, major areas where reforms can help sustain export growth are domestic regulations and reforms and market access for services, it added.

The survey said trade deficit would continue to widen in the current year based on trends in the first six months of 2007-08. The current account deficit is likely to remain at moderate levels given the robust growth in invisible surplus, partly offsetting the rising trade deficit.