JOIN US India's exports grew at a faster pace in May to enter double-digit territory while imports declined, helping in narrowing the trade deficit and boosting the prospects of the new BJP-led government which otherwise started on a sticky wicket on economic front.
While the exports rose 12.4 per cent in May to $28 billion year-on-year, imports were down 11.4 per cent to $39.23 billion, which narrow trade gap to $11.23 billion compared to last year’s $19.37 billion. A 72 per cent drop in gold import to $2.19 billion since May 2013 but jumped from $1.76 billion in April. But analysts were sceptical and called the narrowing of gold imports year-on-year as a seasonal variation.
Commerce Secretary Rajiv Kher said the ministry was in favour of rationalising gold import duty. Currently, India imports gold under 80:20 scheme. A narrowing of trade and current account deficit has given much leeway to the government to relax gold import curbs. Although the BJP-led government has not come out clearly on how it is going to address the issue, the industrialists and trade bodies have been putting pressure to relax customs duty on bullion.
Curbs on gold imports has also impacted the export of gems and jewellery, which registered a marginal growth of 1.36 per cent to $3.43 billion in May. Exports rise in May was helped by a good growth in engineering, petroleum products, ready-made garments, pharmaceuticals and chemical shipments among others. Economic revival in the US and European Union have helped India’s export register a growth for the second consecutive month in May.
India Inc was upbeat on the export performance but expressed optimism and caution both. "Acceleration in export growth is good news. Double-digit rise...reflects our exporters' hard work that has been helped by revival in demand in the US and Europe," Ficci President Sidharth Birla said. "This sends out a strong signal that the Indian economy is striding into recovery," Chairman of CII's Export-Import Committee Sanjay Budhia said.
Assocham Secretary General D S Rawat said, "fall in imports of capital goods owing to India's lower investment activity in the recent past has helped the cause of the trade balance. As domestic investment activity picks up, import of capital goods too would see a jump”. Chairman of engineering exporters body EEPC India Anupam Shah cautioned, "Hopefully, problems relating to power shortages in most parts of India would not come in the way, especially, of manufacturers.