Buoyed by an uptick in demand from US and European markets and a stabler rupee, India’s exports rose 13.47% to $ 27.27 billion in October ? the highest growth rate registered in two years ? while imports dipped by 14.5% to $37.8 billion. This left a trade deficit of $10.56 billion for the month compared to $20.2 billion in October 2012. The trade deficit in September was two-and-a-half-year low of $6.7 billion.
October trade figures, which also revealed a sharp fall in gold and silver imports, have given further credence to the estimate that the current account deficit (CAD) for this year would be substantially lower than the original estimates. Recently, finance minister P Chidambaram said CAD for FY14 would be less than $60 billion, as against the previous estimate of $70 billion.
?This is a consistent growth in exports. The US and Europe are doing well. Exports have shown a significant increase and imports fell significantly. We see no concerns and only South Asia and Latin America are marginally low,? said commerce secretary S R Rao on Monday while releasing the trade data.
In September 2011, the country’s merchandise shipments increased by 36%.
According to Biswajit Dhar, director-general, Research and Information System for Developing Countries: ?Rising exports is good news but import contraction is not a good sign because we depend a lot on it. It implies that domestic (economic) activity is subdued. Moreover, the (export) growth is not riding on a weak currency as the rupee did not depreciate in October. This will narrow the current account deficit (CAD).?
Rao added that all the major sectors (engineering, textiles and gems and jewellery) have shown a positive growth trend. Engineering exports grew by 36% to $35 billion in October. Petroleum exports, on the other hand, fell to $ 5.4 billion during the month compared to $ 6.1 billion last year.
“Rupee depreciation has helped exporters but stubborn inflation keeps exerting pressure on the cost of manufacture, particularly for the small and medium sized exporters. The currency depreciation has helped Indian exports become competitive but volatility in excess is not good either,” EEPC India chairman Anupam Shah said.
The fall in imports was due to a sharp decline in gold and silver imports to $1.37 billion from $6.8 billion in the same period last year and $0.8 billion in September, 2013.
The import curbs on gold seem to have worked, Rao said. Gold and silver imports in April-October 2013 declined by 12.86% to $24 billion compared to $28 billion in the same period last year.
