India Exports Growth Slows.

NEW DELHI -- India's merchandise exports growth decelerated for the second straight month in September and may slow further as demand weakens amid the persisting global turmoil.

Exports in September climbed 36.3% from a year earlier to $24.8 billion, according to data issued Tuesday by the Ministry of Commerce.

Imports grew at a slower pace, rising 17.2% to $34.6 billion, helping narrow the trade deficit to $9.8 billion from $14.0 billion in August.

India's exports have been slowing since surging 82% in July as demand fades from traditional markets like the U.S. and Europe, which are battling to stave off another economic crisis.

The Indian government's efforts to promote exports to newer markets such as in Africa have helped cushion the blow but some economists worry the $300 billion export target for the current fiscal year through March 2012 could be at risk. In the fiscal first half ended Sept. 30, exports have risen 52.1% to $160 billion.

"The outlook on the magnitude of exports in the second half of the current fiscal year remains clouded on account of the prevailing uncertainty related to the sovereign debt and economic prospects of the advanced economies, which continue to account for a sizable share of India's exports," said Aditi Nayar, an economist at ratings firm ICRA.

However, the sharp depreciation in the rupee--about 11% against the U.S. dollar since April--and export benefits such as interest-rate subsidies to certain labor-intensive sectors may slightly help Indian exporters maintain their competitiveness in the near term, she added.

Earlier Tuesday, a separate data release showed that the moderating export demand continued through October.

The seasonally adjusted HSBC Purchasing Managers' Index, prepared by Markit, rose to 52.0 in October from 50.4 in September, which was the lowest in 30 months.

Though robust domestic demand helped lift the manufacturing output, new export orders remained weak, keeping the overall new business flow below historic average, the survey showed.

This, coupled with high wage inflation, resulted in job losses in October, for the third month running, reflecting a generalized slowdown in the economy.

Source : online.wsj.com