13.8.11

Exports deliver a scorcher





India’s merchandise exports rose at their fastest pace in 16 years, but a government official warned of a sharp slowdown ahead because of the uncertainty in the country’s main markets, the US and Europe. July exports surged nearly 82% from a year ago to $29.3 billion while imports grew 51.5% to $40.4 billion, trade data released on Thursday showed.. A 20% growth for the entire fiscal means that in the remaining months exports would expand less than 10%. Exports during the first four months of the fiscal added up to $108.3 billion, up 54% over the same period a year ago, primarily because of demand for engineering and petroleum products, gems and jewellery, and readymade garments. The government has set an export target of $292 billion for 2011-12, up 19% from $246 billion in 2010-11. A weak rupee should help exports. The Indian unit closed at a five-and-a-half month low against the dollar on Thursday. Although exports had contracted for 13 straight months beginning November 2008, India rebounded from the crisis quickly, logging an unprecedented 37.6% growth in 2010-11 on the back of incentives and a push into new markets in Latin America and Africa. Exports of engineering goods, which now account for 30% of the export basket, to Latin America increased four-fold during April to July. IT exports too intensified to the region while the pharma industry found huge demand for its generics in Brazil and Mexico. This strategy targeting Latin America and Africa has its limits, though, as in absolute terms the US and EU still account for a third of the country’s exports. Any decline in exports will have a problem for the balance of payments as trade deficit will widen sharply

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