Macroeconmic Indicators - Indian Export Growth At 29Pct.

The Economic Survey tabled in the Lok Sabha by the finance minister, Mr Pranab Mukherjee said that India’s cumulative export growth in April to December 2010-11 stood at 29.5% with cumulative exports reaching USD 164.7 billion during this period. The exports continued to rise with exports rising at the rate of 13.6% in 2008-09.

Current indications are that India will not only achieve the target of USD 200 billion but surpass it in 2010-11. During 2010-11 (April to December) import growth was at 19% accompanied by an increase in both petroleum, oil and lubricant and non-POL imports at 17.7% and 19.6% respectively. Trade deficit (on customs basis) increased by 2.4% to USD 82 billion in 2010-11 (April-December) from USD 80.1 billion in the corresponding period of the previous year. The relatively higher import growth compared to export growth in the first half of 2010-11, raised the alarm of a possible unmanageable current account deficit. With import growth slowing down from October 2010 and exports picking up in November 2010, the fear that the high current account deficit may be due to high merchandise trade deficit is disappearing.

The Survey observes that the direction of India’s trade with USA, which was in first position in 2007-08, has been relegated to third position in 2008-09, with the UAE becoming India’s largest trading partner, followed by China. This position continued in 2009-10 and the first half of 2010-11 In both 2009-10 and 2010-11(April to September), India’s exports to the UAE were higher than imports, while its exports to China are lower than imports. Export-import ratios show that among its top 15 trading partners, India had bilateral trade surplus with five countries, namely the UAE, USA, Singapore, the UK, and Hong Kong in 2009-10 and the first half of 2010-11. India’s export-import ratio in the case of China is not only low but has been stagnating at around 0.3.

While India ranks 21st in world merchandise exports in 2009 compared to China in first position, in commercial services exports it ranks 12th compared to China at fifth rank. Services exports reached USD 106 billion in 2008-09 with a moderate growth of 17.3% over the previous year but declined to USD 95.8 billion in 2009-10. The share of software services declined to 45.7% in the first half of 2010-11 from 50.8% in the corresponding period of 2009-10. This was a result of moderate growth of 14.7% in the first half of 2010-11 and the revival of non software services exports.

Non software services exports which had registered a high negative growth of - 41.2% in 2008-09 increased their share to 29.5% with high growth of 56.9%. The revival of this sector is a good sign, though it is partially due to the base effect. The falling services trade surplus however is adding to the woes on the current account deficit front, instead of acting as a cushion as was the case earlier.

According to the Survey, Trade policy measures taken by the Government and the RBI in 2009-10 and 2010-11 focused on reviving exports and export-related employment besides mitigating the effect of inflation. The Government followed a mix of policy measures including fiscal incentives, institutional changes, procedural rationalization, enhanced market access across the world, and diversification of export markets.

Exports of SEZs during the first three quarters of the current year have been to the tune of INR 223,132.31 crore. Out of the total employment to 644,073 persons in SEZs, an incremental employment of 509,369 persons was generated after February 2006 when the SEZ Act came into force. Some issues related to SEZs include the deadlines under the Direct Tax Code goods and services tax related issues, coordination issues, and privatization of Government SEZs.

Source : steelguru.com