Imports Dip First Time in 9 Mths.

NEW DELHI: India's imports declined for the first time in nine months, falling 11% to $25.1 billion in December 2010, compared to $28.3 billion a year ago. But there was some good news on the export front. Shipments out of India rose at their fastest pace in nearly 33 months. Exports grew 36.4% in December to $22.5 billion on the back of strong performances by engineering goods, gems and jewellery, leather and other products. Although this helped lower the trade deficit to $2.6 billion, the lowest level in three years, this is not good news for the local industry as imports consist of raw materials and inputs that are used for manufacturing.

Data released by the commerce ministry on Tuesday showed exports rose 29.5% during April-Dec to $164.71 billion, while imports stood at $246.72 billion, rising 19% from the same year-ago period. The trade deficit in the April-Dec stood at $82 billion, which was higher than $80 billion recorded in April-Dec 2009. The strong export performance comes against the backdrop of fragile economic recovery in some developed markets.

Earlier this month, commerce secretary Rahul Khullar had said engineering, gems & jewellery, petroleum and its products, leather and leather products, carpet, plastics and linoleum, cotton yarn and chemicals performed strongly during the first nine months of the 2010-11 fiscal year.

In the past few months, exports have been rising faster than imports and have contributed in narrowing the trade deficit.

Analysts say the strong performance in December shows that there has been significant recovery in the demand for manufactured goods and efforts to diversify into other emerging markets from the traditional markets of the US and Europe are beginning to show some results.

Separate data released showed the country's factory output rose at a robust pace in January but price pressure in the form of input costs surfaced. The HSBC Markit Purchasing Managers' Index, which is based on a survey of around 500 firms stood at 56.8 in January, up marginally from December's 56.7.

"The manufacturing sector started the year out in style, with the growth momentum picking up a tad led by higher output as order books continue to thicken, reflecting, in particular, strong demand from domestic clients," said Leif Eskesen, chief economist for India and Asean at HSBC.

Source : timesofindia.indiatimes.com