New Delhi: India’s exports rose for the first time in 14 months as recovery in the global economy boosted year-end holiday demand for the nation’s products.
Overseas shipments increased 18.2% to $13.2 billion (Rs61,644 crore) in November from a year earlier after sliding an average 21% per month since October 2008, according to a trade ministry statement. Imports fell 2.6% to $22.8 billion in November, resulting in the trade deficit narrowing to $9.6 billion from $12.3 billion a year ago.
Record low interest rates and at least $2 trillion in government stimulus worldwide are reviving demand for clothes made by Gokaldas Exports Ltd and Hyundai Motor Co. cars. South Korea’s exports rose 33.7% in December, the fastest pace in 17 months as Asian economies from China to Singapore recover from the worst global recession since the 1930s.
“We are seeing a rebound in overseas sales mainly due to improved conditions in the US and Europe and festival demand ahead of Christmas,” said N.R. Bhanumurthy, an economist at the National Institute of Public Finance and Policy in the Capital.
A return to export growth may boost production at companies in India and bolster the revival in Asia’s third biggest economy, which expanded 7.9% in the three months to 30 September from a year earlier, the quickest pace in six quarters.
Some sectors have started showing signs of improvement. Overseas sales of Indian gems and jewellery jumped 54.8% to $21.4 billion in November, compared with $13.8 billion in the same month a year ago, according to the Gem and Jewellery Export Promotion Council. Vehicle exports rose 25% in November from a year earlier, the Society of Indian Automobile Manufacturers said on 8 December.
November’s increase in exports shouldn’t be seen as the beginning of a positive trend, as shipments rose mainly due to a low base in the same month last year, Bhanumurthy said.
The difficulties for exporters and the Indian economy are not yet over, he said. The surge in inflation will result in increasing input costs for exporters, forcing them to raise prices and making it difficult for them to remain competitive in overseas markets, Bhanumurthy said.
India’s benchmark wholesale price index climbed 4.78% in November from a year earlier, more than tripling from a 1.34% gain in October, the government said on 14 December. A stronger rupee is also affecting exporters’ earnings, according to the Federation of Indian Export Organisations.
The low base effect on November’s export growth means there is no need to go hoopla over these numbers, trade secretary Rahul Khullar said on 15 December.
Shipments dropped almost 20% in November 2008 from a year earlier. Overseas sales declined 22.3% to $104.24 billion in the eight months to November from a year earlier. Imports fell 27.3% to $170.4 billion.
Non-oil imports dropped 5.9% to $16.5 billion in November from a year ago, while oil imports rose 7.3% to $6.38 billion in the same month, the government report showed.
The US returned to growth in the third quarter after a year-long contraction and France, Germany and Japan have exited recession. The US economy, India’s second biggest export market, expanded 2.2% in the July-September quarter.