New Delhi: India may miss the export target of $200 billion (Rs9.8 trillion) set by the government in the current fiscal, with weakening global demand starting to affect overseas shipments, experts said after the Centre released trade data on Monday.
In September, exports grew 10.4% to $13.7 billion, the slowest pace in 18 months, according to the data, as recessionary trends in major markets such as the US and Europe reduced demand for products and services. The US economy shrank by 0.3% during July-September.
In the first six months of the fiscal (April-September), exports grew a robust 30.9% in dollar terms to $95 billion.
The rupee has depreciated around 20% this calendar year, helping exports, but that beneficial effect is being offset by waning demand in the wake of the global financial turmoil and credit crunch.
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“The exports growth will come down further from its September level. Despite the rupee depreciation, the export finance has become very expensive which is hurting the exporters,” said G.K. Gupta, president of the Federation of Indian Export Organisations, or FIEO. “Also, demand for Indians products has declined due to a slowdown in the US and European markets.”
Imports during September grew 43.3% to $24.4 billion, leaving a trade deficit of $10.7 billion.
Declining export growth would add pressure on the trade deficit and current account deficit, said Rajiv Kumar, director and chief executive of Delhi-based think tank Indian Council for Research on International Economic Relations. “This is a beginning of a downward trend and reflects the slowdown in manufacturing and external demand. With imports growth remaining high, this may further push current account deficit to around 3% (of gross domestic product),” he said.
Exporters are seeking appointments with the Prime Minister, the finance minister and the commerce minister next week, Gupta said. Prime Minister Manmohan Singh, in a meeting with top industrialists on Monday, said the government would take all domestic monetary and fiscal policy measures to protect growth rates. Exporters are seeking cheaper credit and an interest subsidy on trade finance after borrowing costs rose.
Gupta said he is “doubtful” the government’s exports target of $200 billion will be achieved. “We may reach $185-190 billion of exports this year,” he said.
The economic advisory council, in its Economic Outlook for 2008-09 released in July, had projected total merchandise exports of $205 billion in 2008-09.
India’s exports grew 23.1% to $155.5 billion in 2007-08.
During the first half of the fiscal, imports rose 38.6% to $154.7 billion from $111.6 billion a year earlier, the official data showed. The trade deficit in the period widened to $60 billion from $39.1 billion a year ago.
Oil imports during September were valued at $9.1 billion, 57% higher than $5.8 billion in the same month last year. Oil imports during April-September rose 59% to $55.1 billion from $34.6 billion during the corresponding period last year.
Though crude oil prices have declined in recent months, the average per barrel price for September was still higher than last year’s.
“Higher volumes of imports due to increasing domestic demand for consumption as well as refining for export purposes have also pushed up oil import bill,” said a petroleum ministry official, asking not to be named.
Utpal Bhaskar and Bloomberg contributed to this story.