Exports fall 15% to $22.4 b in July

Sharp dip in shipments raise doubt over achieving $350-billion export target

Raising fresh doubts over the achievability of $360-billion trade target in the current fiscal year, India’s export fell sharply in the month of July, even as the government has promised more steps to revive outbound shipments in the coming months.

Exports fell 14.8 per cent to $22.4 billion while imports declined 7.6 per cent to $37.9 billion on a year-on-year basis, according to the data released by the Ministry of Commerce.

In the April-July period of the current fiscal year, exports dipped 5.06 per cent to $97.65 billion while imports fell 6.47 per cent to $153.2 billion n the same period. The trade deficit for July stood at $15.5 billion, up from 147.2 billion a year ago. The cumulative trade deficit for the April-July period narrowed to $55.55 billion, compared to the $60.96 billion deficit in the same period last year.

The government maintains that the drop in exports has been registered mainly due to weakening demand in the key western markets of the US and Europe, but has expressed hope that there will be a turnaround from October.

The government had earlier announced various sector-specific incentives and given support to small and medium enterprises and some major sectors, which are labour-intensive, such as handloom, handicraft and readymade garments. These incentives have come in the form of interest subvention and other support measures. In June, the government announced $1.79 billion package to encourage exports, especially by small enterprises that are usually the worst-hit during a demand slodown.

It had extended a 2 per cent interest subsidy on loans to handloom and handicraft exporters and to some other small and medium enterprises. The government has also encouraged exporters to tap into new markets in Southeast Asia to cushion the impact of the demand slowdown in Western markets.

The outward shipments have also declined due to a drop in the export of petroleum products. The weak trade data has raised fears of a worsening balance of payment situation and hitting the Indian rupee further. India is aiming to boost exports by about 20 per cent to $360 billion in this fiscal year that began April 1. Oil and non-oil imports in July declined by 5.52 per cent and 8.57 per cent to $12.22 billion and $25.7 billion respectively. During the first four months of the current fiscal, oil imports grew by 2.76 per cent to $53.81 billion from $52.36 billion in the corresponding period last year.

“Going by the trend so far and the continuous degrading global market condition, I have my grave doubts on achieving the exports target of this fiscal,” Director of Indian Institute of Foreign Trade (IIFT), K T Chaco said, adding that even market diversification “will alone not help Indian exporters till the major markets are down”.

Ficci President R V Kanoria said the main cause of concern is the need to bring back competitiveness into the economy and stimulate investments. Indian exporters are also under pressure due to high cost of credit, he said.