Trade snapshot

A surge in imports driven by massive gold purchases widened the trade deficit sharply, overshadowing the further improvement in exports performance.
Worried government said it will take measures to improve the trade deficit, which contributed massively to the record high current account deficit.
Exports rose 1.68% in April to $24.1billion, fourth straight month of increase, while imports climbed 10.9% to $ 41.95 billion, yielding a trade deficit of $ 17.8 billion.
India’s current account deficit is expected to touch record high of 5% of GDP in 2012-13, as measures to curb gold imports have only had a marginal effect.
The country imported $52.5 billion worth of gold and silver in 2012-13 against $56.7 billion in 2011-12, but experts say the April jump in gold imports should be one off, as investment demand for the yellow metal is likely to remain weak.
Gold and silver imports grew by 138% in April on a year-on-year basis, from $3.1 billion last year to $7.5 billion this year, led by falling prices and festival demand.

The record high trade deficit overshadowed the steady improvement in exports, driven by higher shipments of gems & jewellery, rice, ready made garments, cotton and marine products. Ready made garments grew by 8.6%, as against a contraction in most part of last year, indicating a pickup in overseas demand.
Commerce ministry has set an export target for the fiscal at $325 billion, about 8% growth from last year’s $300.6 billion.
Exports had shrunk 1.6% in the last fiscal.
The fresh set of incentives under the foreign trade policy announce last month came into effect from May 1 and are expected to help give a push to exports, helped by a revival of demand in the US economy.
A RBI committee last week suggested a slew of measures like introduction of differential tax regime and increasing the scope of interest subsidy scheme for exporters
Engineering exports saw an 8.6% contraction due to power cuts and high cost of credit making exports less competitive.
Petroleum imports grew by 3.9% during the month, from $13.6 billion last year to $14.1 billion now. Trade deficit was $14 billion in April last year and $10.3 billion in March this year. Though government has taken several measures it the form of duty increase to deter gold imports, the fall in global prices have led to neutralization of the duty position, said DGFT Anup Pujari.
Rao said that government will come up with ways to address the growing trade deficit.