India’s merchandise trade has started to show signs of improvement in the last quarter with slow recovery in US. However, merchandise exports like engineering goods and apparels meant largely for European markets continue to see slowing demand.
As per provisional data released by commerce ministry on Thursday, exports grew by 10.1 per cent in January 2012 at $25.4 billion while imports grew by 20.3 per cent at $40.1 billion leading to a trade deficit of $14.7 billion.
“Going forward, import demand is likely to go down, as it gets expensive with impact of exchange rate fluctuations kicking in. This means, we are likely to see balance of trade deficit narrowing down in next two months,” commerce secretary Rahul Khullar said while sharing the trade data.
The export growth of over 10 per cent in January 2012 is slightly better vis-à-vis 6.7 per cent in previous month as anticipated, due to improvement in demand for gems and jewellery. The sector is barely dependant on EU and therefore has registered a cumulative growth of 33 per cent in the first ten months with exports at $37 billion.
“Demand has started picking up in US from last month onwards and we see some improvement in exports in coming months. This will help to register at least 15 per cent increase in sales this year,” Sanjay Kothari, vice-chairman of Gems and Jewellery Export Promotion Council added.
Cumulatively, exports between April and January grew by 23.5 per cent at $242.8 billion while imports went up by 29.4 per cent to $391.5 billion. Cumulative trade deficit between April and January stood at $148.7 billion. With trade numbers for the ten months already available, Khullar has projected total exports from the country at $295-305 billion, imports at $460 billion and a trade deficit of $160 billion in 2011-12.
Going forward, however, commerce secretary feels that the next financial year will be worse for exports as the uncertainty over EU crisis continues. “Even consumer and industry confidence is not booming despite slow revival in the US. Moreover, with tight fiscal and inflationary situation, there will be no subsidies and support for exporters in the upcoming budget and therefore a growth of even 20 per cent next year would be pretty alright,” he added.
Even the Federation of Indian Export Organisation (FIEO) feels that fiscal 2012-13 will not be easy for the exporting community.
Source : mydigitalfc.com