New Delhi: Indian merchandise exports grew at the fastest pace in six years in March, partly because of a low base a year earlier, amid concerns over the impact of a looming European debt crisis and an appreciating rupee on overseas shipments.
Exports increased 54% in March from a year earlier to $19.9 billion (Rs90,346 crore), according to commerce ministry figures released on Thursday. In the full fiscal year to March, exports declined 4.7% to $176.5 billion from $185.3 billion in the previous 12 months.
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Imports grew 16.6% to $27 billion in March, leaving a deficit of $7.1 billion. In the year to March, imports fell 8.2% to $278.7 billion. That left a trade deficit of $102.2 billion for the full fiscal, down from $118 billion in the year prior.
India’s merchandise exports bounced back into positive territory in October after a 11-month decline caused by recession in the US and Europe that lowered consumer demand.
Commerce minister Anand Sharma said interventions by the government, which provided more incentives to exporters to offset the overseas downturn, had produced results.
“We have many sectors that have recovered. There has been substantial recovery compared to other countries,” Sharma said.
Commerce secretary Rahul Khullar cautioned exporters against the impact of the Greek debt crisis and its subsequent fallout in Europe, the traditional market for Indian merchandise. “It was never factored in earlier,” he said.
That warning comes at a time when export sectors such as engineering (-21%), electronics (-13%), oil meals (-26%), handicrafts (-41.2%), cotton yarn and carpet are still struggling to recover. “We are concerned about these sectors,” Sharma said.
There are also concerns about the steady appreciation of the rupee, which erodes the competitiveness of exporters. The rupee has gained around 5% against the dollar this year.
Still, the rupee’s appreciation has so far not been steep enough to dent exports, said Sharma. “The Reserve Bank of India (RBI) is monitoring the currency situation. Intervention is made when it is imperative. In RBI’s view that situation has not arrived,” he said.
Sharma told reporters that consultations were under way with various stakeholders after which the government would take a call on providing further incentives to ailing export sectors. “The sectoral review will be completed positively by July,” he said.
The commerce ministry has set a modest target of $200 billion in exports for the current fiscal, expecting growth of 13.3%. “We are confident of achieving that target and hopefully we will exceed that,” Sharma said.
Graphic by Ahmed Raza Khan/Mint
Bloomberg and PTI contributed to this story.