Though June exports are lower than they were in the previous month, what is important is that, at over 10% on a y-o-y basis, this is the third consecutive month of exports growing. That’s good news and indicates that, as the global recovery picks up, so will Indian exports. Even the sectors where there has been a recovery are interesting—petroleum exports are up 38% and engineering 21%. While readymade garments are up a healthy 14%, the shocker is a contraction of 5% in gems and jewellery exports that comprise over 12% of India’s total basket.
One reason for this could be the restrictions on gold imports that have only now begun to be lifted. While June’s $3 billion imports were double the average for the last year, even if gold imports rise to 800 tonnes in FY15 versus 640 tonnes in FY14, at the lower global prices, this still keeps FY15 CAD at under 2% of GDP which is easily financed. There is a definite case for lowering import duties and lifting remaining restrictions.