Trade snippets : May 2014

India's exports rose over 12% to $28 billion in May , the fastest pace of growth in seven months, on the back of improving demand in the developed markets and partly due to depreciation of the rupee against the dollar. Lower trade deficit, on back of continued fall in imports also, raised the pitch for easing gold import restrictions that were imposed last year to bridge the gap.
The recent run of good numbers -from exports to core sector and auto sales -have also raised expectations of a better positive industrial growth when the numbers are released on Thursday . Factory output has been falling for two straight months and is putting pressure on the overall growth rate.
Data released showed that during May , most of the large export sectors such as engineering goods (22% rise to $6.1 billion), petroleum products (near 29% increase to $5.9 billion), readymade garments (25% to $1.5 billion) and pharmaceuticals (10% to $1.4 billion) put up a healthy performance. Gems and jewellery appeared to be the sole laggard among the major product categories, rising 1.4% to $3.4 billion.
“There is a positive spirit and if this trend continues next month then I will definitely be saying that there is a revival. So, I would like to see the next month also... It seems that they (products) are now acquiring their natural levels,” said commerce secretary Rajeev Kher. Asked about the export target for 2014-15, he said, “We are working towards something like $1 billion exports on a daily basis.” On the import front, the fall was mainly on account of a 72% drop in gold imports on the back of higher import duty and other restrictions that have been imposed. Oil imports were up 2.5% to $14.5 billion. With the trade deficit narrowing to $11.2 billion in May 2014, compared to over $19 billion a year ago, the commerce department raised the pitch for easing of gold curbs, including “rationalization” of import duty from the current level of 10%. The government had last year restricted the import of gold coins and medallions and also put checks on gold to be used for processing and export in the form of jewellery, which is what the commerce department is focusing on.