Exports held out despite slowdown but outlook cloudy (2011 in Retrospect)

December 25th, 2011 - 3:35 pm ICT by IANS  

New Delhi, Dec 25 (IANS) Despite the global downturn and major fluctuation in the value of the rupee, India’s merchandise exports logged a robust rise during 2011 with experts attributing this to the government’s focus on product and market diversification.

The year also saw Pakistan extend “most-favoured nation” status to India, even as two comprehensive economic partnership agreements (CEPA) were signed with Malaysia and Japan, bringing the number of such pacts with countries or regional fora to 11.

Merchandise exports that account for 22 percent of the country’s gross domestic product, rose by an impressive 33.2-percent at $192.7 billion during the first eight months of this fiscal, exceeding the official target.

Now the government and industry hope that the fiscal year will end in March with the country logging at least 20 percent annual growth to top $300 billion, against $246 billion in the previous year.

“So far the overall growth in our exports has been quite impressive given the global economic situation. Market diversification has helped keep the growth momentum,” said Ramu S. Deora, president, Federation of Indian Export Organisations (FIEO).

“The third quarter is not going to be good. Exports growth will fall to a single digit. But things are likely to improve in the fourth quarter,” Deora told IANS, hoping the overall situation for the fiscal year as a whole will be satisfactory.

His concern emanated from growth in exports slumping to just four percent in November, the slowest in almost two years. The growth was 10.8 percent in October and 36.3 percent in the previous month.

Minister of State for Commerce Jyotiraditya Scindia said the government’s strategy of product and market diversification will minimise the impact of uncertainties in Europe, the US and Japan which traditionally accounted for over 60 percent of exports.

As part of the market diversification programme, the government promoted exports to some non-traditional markets like Africa and Latin America. On the other hand, petroleum and engineering goods led the exports growth in terms of products, along with jewellery.

Yet, widening trade deficit remained a matter of concern. India’s imports rose to $309.5 billion during the April-November period due mainly to crude, gold and silver, leading to a trade deficit of $116.8 billion in eight months.

Considering the current trend, total trade deficit in 2011-12 is likely to surpass the $150 billion mark, experts maintain. In 2010-11, trade deficit had declined to $94.6 billion from $109.6 billion in the previous year.

The recent weakness in the rupee, which depreciated almost 20 percent against the US dollar since July, also pushed up the import bill, especially of petroleum products, gold and silver.

Deora said volatility of the rupee which pushes import costs was a matter for concern.

“Most of our exports are dependent on imports of some items. Like gems and jewellery is dependent on imported gold, silver and stones. Similarly, export of petroleum, chemical and engineering goods are also heavily dependent on imports of raw materials.”

Following are the highlights of India’s foreign trade in 2011:

-Export target set at $300 billion for 2011-12 against $246 billion logged last fiscal

-Target to boost exports to $500 billion by 2013-14

-April-November exports rose 33.2 percent to $192.7 billion

-Trade deficit widened to $116.8 billion and may cross $150 billion

-Imports also surged to $309.5 billion April-November

-Asia, Africa and Latin America named focus markets for exports

-Focus products cover pharma, electronics, auto, engineering, electronics and aerospace industries

(Gyanendra Kumar Keshri can be contacted at gyanendra.k@ians.in and biz@ians.in)

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