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Trade contracts. With who is the question

India’s fifth largest export destination was ‘unspecified’, which accounted for exports of $16.4 bn in FY 12
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First Published: Tue, Feb 05 2013. 08 37 PM IST
Exports to the European Union, which has been battling a sovereign debt crisis, and Asia also fell but, surprisingly enough, sales to the US rose modestly in the April-December period. Photo: Mint
Exports to the European Union, which has been battling a sovereign debt crisis, and Asia also fell but, surprisingly enough, sales to the US rose modestly in the April-December period. Photo: Mint
Updated: Wed, Feb 06 2013. 12 54 AM IST
New Delhi: A steep fall in shipments to countries left unnamed by the commerce ministry contributed to the contraction of India’s merchandise exports, which declined for the eighth month in a row in December, according to official trade data.
Exports to the European Union, which has been battling a sovereign debt crisis, and Asia also fell but, surprisingly enough, sales to the US rose modestly in the April-December period, although the world’s largest economy is still struggling for recovery from the financial crisis that felled it in 2008.
Disaggregated data available for April-November shows a 93.4% decline to $900 million from $14.3 billion in the same period the previous year in India’s exports to miscellaneous trade destinations classified by the commerce ministry as unspecified.
In fact, unspecified was India’s fifth largest export destination, accounting for exports of $16.4 billion, and the country’s 14th largest trade partner with $17.5 billion of bilateral trade in the fiscal year ended 31 March 2012.
“Sometimes the country name and country code written on merchandise items do not match. In such cases, we categorise them under the ‘unspecified’ head,” a commerce ministry official said on condition of anonymity.
Another government official with knowledge on the matter said it was basically a data collection problem and no mischief was involved.
photo
K.T. Chacko
, former director of the Indian Institute of Foreign Trade, said usually exporters make mistakes in entering the product codes and entering the country code correctly isn’t very difficult. “I cannot find any reason why this is happening. At present there is ambiguity. Commerce ministry need to clarify the matter,” he said.
Disaggregated trade data for April-November also show that while India’s efforts for trade diversification towards African and Latin American countries is slowly paying off, its free trade agreement with the Association of South-East Asian Nations (Asean), which came into effect on 1 January, 2010, has so far benefited only the latter.
Exports to the Africa grew 13.9% to $17.8 billion during April-November, while shipments to Latin America rose 10.4% to $8 billion. India is offering incentives to exporters to boost sales to such regions through various schemes.
The commerce ministry targeted a 20% increase in exports in the current fiscal, but is staring at an overall contraction of exports in the year. During 2011-12, India’s exports grew 21.8% to $306 billion, while imports jumped 32.3% to $489 billion .
The commerce ministry has also revised provisional trade data down, leading to a larger contraction of merchandise exports than earlier envisaged.
While provisional data released by the ministry showed exports shrank 5.95% to $189.2 billion in April-November, revised data reviewed by Mint shows exports contracted 7.1% to $186.9 billion during the period.
Exports to the European Union contracted 11.1% to $31.3 billion, while exports to China shrank by 25.3% to $8.4 billion during the same period. Exports to Asean member-states fell 18.62% to $19.2 billion.
India exports mostly raw materials and minerals to China and restrictions on the production of such materials because of environmental and regulatory issues had caused the decline in exports to China, said Chacko. India’s trade deficit with China stood at $28.7 billion during April-November, the largest with any country.
Disaggregated trade data show that exports to the US actually rose 11.6% to $25.2 billion during April-November, belying concerns that the grim economic situation in the US may lead to a decline in shipments.
The US was India’s top export destination, overtaking the United Arab Emirates, which topped the list in the last financial year.
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First Published: Tue, Feb 05 2013. 08 37 PM IST
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