Exports fall in Feb but trade deficit narrows to $8.13b

Full-year export target tough to achieve

A steep fall in oil and gold imports kept India’s trade deficit in February under a check but a loss in export growth momentum may cast a shadow on the government’s aim to reach a $325 billion exports this year.

In February, merchandise exports fell 3.67 per cent year-on-year and stood at $25.69 billion, the first decline in the past eight months. Exports had grown 3.8 per cent in January.

Trade deficit recorded its steepest fall since September 2013 last month to $8.13 billion from $14.12 billion in the year ago. Trade gap was $9.92 in January.

But the narrowing of trade deficit is mainly driven by lowering of imports – both oil and non-oil and not due to a rise in exports. Experts said, once the economy rebounds and imports increase, the trade deficit may again balloon.

Imports recorded a steep 17 per cent fall year-on-year. Imports dropped 18.07 per cent to $36.6 billion, its sharpest decline in the preceding four months.

“The momentum of export growth has been lost when we were about to reach the final goal-post," said Anupam Shah, chairman of the Engineering Exporters' body, EEPC India. "At this rate, there is no way we can achieve the target of $325 billion in the current fiscal year.”

Trade secretary Rajeev Kher said if all went well in the remaining one month to this fiscal India might achieve $310 billion of exports. But that is still $15 billion short of the targeted growth in 2013-14.

"We have reached $282 billion and if we will follow the same trend as we did last March, exports should be close to $310 billion by end of the current fiscal," Kher said"I will not be happy with $310 billion. We need to have better performance...We have not done well as we should have," he said.

Kher expressed hope that sectors including textiles and pharmaceuticals would do better in the months ahead. Falling imports, however, are good in the sense they will further ease pressure on the India's current account balance.