Tepid demand in traditional markets of the US and Europe sent India’s exports slowing by over 4 per cent to $25.68 billion in May, while sluggish domestic environment saw imports declining too, prompting the government to take additional steps to calibrate shipments in order to achieve a $360 billion export target this year.
India’s imports declined 7.36 per cent to $41.9 per cent in May 2012, compared with the same period last year leaving the trade deficit also shrinking to $16.3 billion. The trade deficit was $18.5 billion in May 2011. The country’s flagship exporting sectors including engineering, pharmaceuticals, gems and jewellery and readymade garments registered a negative growth.
On the import side, gold and silver imports dropped by over 50 per cent, while plant and machinery declined 8 per cent.
However, imports of crude oil were up 14 per cent, the provisional data released by the Commerce and Industry Ministry showed on Thursday.
A worried government said it was trying to regenerate exporters’ enthusiasm in new and emerging markets of Asia, Latin America and Africa. Commerce Secretary S R Rao also said that officials were doing an analysis on countries with whom India has trade surplus as well as deficit.
India has a trade surplus with the US, Singapore and the Netherlands among other countries and a deficit with neighbour China, Switzerland, Saudi Arabia and Kuwait.
Rao, however, expressed hope that softening of international crude prices and forecast of normal
monsoon will have some positive impact on India’s shipments. The government has already announced measures to boost India’s exports while unveiling the annual supplement to the foreign trade policy earlier this month.
Commerce and Industry Minister Anand Sharma had announced extension of the 2 per cent interest subsidy scheme for labour intensive sectors and enlarged the scope of zero-duty EPCG scheme to push exports to $360 billion in the current financial year.
The FIEO President Rafeeque Ahmed said that Indian exporters were increasingly focusing on opportunities in Iran to bridge the trade deficit.