India's exports decline in May, imports still high

India's exports decline in May, imports still high

Trade deficit crosses $20-billion mark

India's exports decline in May, imports still high

India’s exports witnessed a decline of 1.1 per cent in May after a suspension of gold exports in special economic zones (SEZ) while imports continued to grow at a rate close to 7 per cent leaving a trade deficit of over $20 billion.

The weakness in European markets too impacted the country’s exports, Commerce Secretary S R Rao said.

India’s exports in May were at $24.51 billion compared to $24.78 billion in the same month of 2012. Imports in May grew $44.65 billion. The most worrisome remained the gold and silver imports, which grew by 89 per cent to $8.39 billion, the official data said.
The trade deficit at $20.1 billion due to high gold and oil imports remained at at a seven-month high.

Rao, however, expressed the hope that from June, exports would bounce back as gold trading activities have started again in SEZs.

“We have now made it mandatory that even in SEZ, gold units shall comply with the DGFT notification of minimum value addition of 3 per cent in gold jewellery and 5 per cent in gold and precious stone studded jewellery,” Rao said.

“In May, because we stopped gold trading in SEZs, that itself has declined by $0.8 billion... and if you look at export figures for May, our shortfall has been much less than $0.8 billion... gold trading in SEZs is hitting India’s exports,” Rao said.

He said although the US market was improving, the EU was not out of the woods. Both the markets accounts for about 30 per cent of India’s exports.

On the impact of rupee fall on exports, Director General of Foreign Trade (DGFT) Anup Pujari said it does not benefit much for exports because of high import content in the India’s major shipments like pharmaceuticals and gems and jewellery.

Oil imports in May grew by 3 per cent to $15 billion while non-oil imports rose 9.1 per cent to $29.62 billion.