| Date: |
16-07-2015 |
| Subject: |
Exports continue slide for seventh month; down 15.82 per cent in June |
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NEW DELHI: India's exports declined for the seventh successive month in June amid persistently weak global demand and lack of competitiveness due to a strong rupee.
Imports fell at the fastest pace in 16 months owing to decline in gold imports and lower valuation of crude imports, which helped contain trade deficit despite the slump in exports.
Exports fell 15.82 per cent in June while imports declined 16.72 per cent, compared to the year-ago period, leaving a trade deficit of $10.82 billion, data released by the ministry of commerce and industry showed on Wednesday. Key export sectors such as engineering, electronics, leather and petroleum posted negative growth, contributing to lower domestic production as well. Industrial production growth slowed to 2.7 per cent in May from 3.4 per cent in the month before.
In 2014-15 exports fell 1.23 per cent compared to the previous fiscal, at $310 billion, missing the $340 billion target by a huge margin. World trade grew only 0.7 per cent in the quarter to March this year, well below the World Trade Organisation's forecast of 3.3 per cent growth in 2015.
After declining 4.44 per cent in May, imports other than that of oil and gold rose a dismal 2.7 per cent during the month, pointing to weak domestic production and demand. The recent strengthening of the rupee against the US dollar and other key currencies has also impacted export orders because of loss of competitiveness to rivals. The rupee closed at 63.4 against the greenback on Wednesday. Indian currency has been in a tight range for a while against the dollar while others have depreciated
The Federation of Indian Export Organisations ( FIEO) said in a statement that apart from weak global demand "strengthening of Indian rupee against USD at a time when other currencies have weakened substantially, high cost of credit and increasing logistics cost contributed in no less measure" to the decline.
Overall exports for June were placed at $22.3 billion, almost the same as in the previous month, with pharmaceuticals posting a growth of 10.84 per cent and readymade garments 11.04 per cent. Gems and jewellery exports grew 6.42 per cent while engineering goods posted a 5.56 per cent decline.
Gold imports in May fell to a five-month low of $1.9 billion, and 37 per cent lower compared to the year-ago period, suggesting that lower inflation and incentive to financial savings worked to dampen demand.
The current account deficit is expected at 1 per cent of GDP in 2015-16 compared to 1.3 per cent of the GDP in the previous fiscal.
The slump in global oil prices led to a 35 per cent contraction in India's biggest import item but it also pulled down petroleum exports, which fell 53 per cent during the month. After a year's gap India announced a five-year foreign trade policy to give a concentrated push to both merchandise and services exports to help double total exports to $900 billion by 2019-20.
The government announced tax incentives under Merchandise Exports from India Scheme (MEIS) and Services Exports from India Scheme (SEIS), which is in the form of fully transferable duty credit scrips with reward rate ranging between 2 per cent and 5 per cent. Exporters can use these scrips to offset service tax, excise duty or customs duty.
Source : economictimes.indiatimes.com
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