New Delhi: India’s April exports surged by more than a third on demand for engineering goods, gems and oil products, but concerns persist over an uncertain outlook in the United States and Europe which could crimp demand, commerce secretary Rahul Khullar said.
Goods exports from Asia’s third-largest economy have recovered strongly from the doldrums of the global economic slowdown and the government has envisaged at least 25% growth for the fiscal year which started on 1 April.
India’s monthly exports have notched double-digit growth for much of the past year as demand, which had fallen sharply after the financial crisis, revived from key importers -- the United States and Europe . Indian exporters have also seen high growth in new markets, especially in Latin America.
But Indian exporters will likely keep a wary eye on how Europe manages the debt troubles of the likes of Greece, Portugal and Ireland, as well as ongoing uncertainty over the US economic recovery and disaster-hit Japan.
India also faces the prospect of a ballooning import bill in the next few years to feed a rapidly expanding economy hungry for oil, machinery and electronic goods. High global crude prices have fed inflationary expectations and will likely pressure India’s trade deficit in this fiscal year.
Oil prices rose to 32-month peaks in April due to tensions in the Middle East and North Africa, but a combination of a stronger dollar and signs of cooling in China has brought down prices down. Brent crude fell 68 cents to $111.89 a barrel by 03:00 pm.
“I still remain far from sanguine that 2011 will be a good year,” Khullar told reporters on Thursday.
“All of you know what is happening in Europe. All of you know the slowdown in the US I think it’s not going to be an easy summer.”
India’s April exports provisionally rose an annual 34.4% to $23.9 billion while imports rose 14% to $32.8 billion, he said.
Oil imports for the month were at $10.2 billion, though Khullar said this figure would likely rise in the final data reading, which would be released on 1 June.
In the 2010-11 financial year, exports rose 37.5%, comfortably beating the target of $200 billion, which helped narrow the trade deficit that had surged to a 23-month high in August and rein in current account deficit to under 2.5% of the gross domestic product for the October-December quarter.
The government is likely to raise domestic fuel prices this month. Higher interest rates as India’s central bank steps up its fight against sticky inflation -- even at the cost of near-term growth -- may also hurt manufacturing exports.
“We maintain our view that the CA (current account) deficit will widen to 3.2% of GDP in 2011-12 due to higher crude, but financing it should not be a problem,” brokerage CLSA said in a note in April.