India's non-oil import growth to fall sharply: Nomura.

India's non-oil import growth is expected to slow sharply to single digit in the current fiscal year ending March from 24 percent in 2011/12 due to a slump in the rupee, brokerage Nomura said on Tuesday.

It said this would help reduce the current account deficit, which widened to 4.3 percent of the gross domestic product in the December quarter.

The Reserve Bank of India said in April the deficit was unsustainable and flagged concerns on financing such a large gap amidst slowing capital inflows.

Non-oil imports include gold, capital goods, coal, fertilisers and other metals, and comprises 70 percent of total imports, Nomura said.

"Imports are now more expensive which should encourage reverse substitution (lower imports, higher domestic production)," it said.

The rupee plummeted to a life-time low of 56.40 to the dollar last week, making it the worst performing Asian currency since February, hit by slowing growth, stubborn inflation and large current account and fiscal deficits.

The currency has since pulled back and was trading at 55.60 by 0810 GMT, but is still down 11.85 p ercent in about three months.

"A lacklustre investment demand should also keep volumes subdued," Nomura said, referring to imports.

Source : in.reuters.com