Exports in Aug up 22.5%; trade gap a concern

Exports grew by an annual 22.5 per cent to $ 16.64 billion in August on improved global demand for Indian merchandise, giving policy makers confidence about achieving the $ 200 billion target for the fiscal.

Imports jumped at a higher pace of 32.2 per cent to $ 29.7 billion in August, leaving a trade deficit of $ 13.06 billion, which is a cause for worry.

"Things are going so far according to our plan and we should be able to reach over exports target of $ 200 billion," Commerce Secretary Rahul Khullar said.

Expressing optimism, exporters body FIEO said that with this growth rate, exports would even surpass the $ 200 billion target and reach $ 210 billion.

Meanwhile, industry reported a 13.8 per cent growth in July, beating by a wide margin the market estimates of a single digit growth.

However, the rate of "heady growth" witnessed in the first quarter of the year has clearly decelerated, Khullar said.

He said while there is a marked improvement in exports during 2010-11 over the previous year "you are well below the $ 17.8 billion which was achieved in August 2008-09".

With imports rising on the back of 8.8 per cent economic growth in the first quarter of the fiscal, ballooning gap between exports and imports (trade deficit) remains the main area of concern for the government.

For the April-August period, the trade deficit aggregated $ 56.62 billion with a monthly average of $
11.2 billion.

The year may end with a trade gap of $ 135 billion. "The gap will be very very large, even compared to $ 118 billion, that we had two years ago."

During April-August this fiscal, exports posted a growth of 28.6 per cent to $ 85.27 billion on a year-on-year basis. Imports during the period grew by 33.1 per cent to $141.89 billion.

The sectors, which registered a healthy rate of exports growth during the first four months of the current financial include cotton yarn and fabric (41 per cent), gems and jewellery (28 per cent), iron ore (84 per cent), chemicals (23 per cent), engineering (40 per cent) and petroleum, oil and lubricants (POL) (50 per cent).

However, segments like readymade garments, handicrafts, handlooms and carpets are still in a bad shape, he said.

During April-August 2010-11, segments that witnessed a good growth rate include POL, which was up 31.7 per cent, fertilisers (79 per cent), vegetable oil (67 per cent), coal (43 per cent), iron and steel (64 per cent), gold (27.7 per cent) and machinery (20 per cent).