Exports Grow by Mere 3.2% in April

New Delhi
Exports Grow by Mere 3.2% in April

Exports grew by a meagre 3.2 per cent year-on-year to USD 24.4 billion in April 2012, prompting a worried government to state it may extend sops for labour intensive sectors like textiles in the next few days.

Sharp deceleration in import growth to 3.8 per cent to USD 37.9 billion resulted in trade deficit narrowing to USD 13.2 billion, the lowest in the last seven months.

Reduction in trade gap would at least lessen worries arising out of sharp decline in rupee against the US dollar.

The Commerce Ministry is expected to announce some incentives for the hard-pressed labour intensive export sector when it unveils the annual supplement of the Foreign Trade Policy.

After chairing a meeting of the Board of Trade which reviewed challenges for the export sector in the wake of difficult global situation, Commerce and and Industry Minister Anand Sharma said, the target of achieving USD 500 billion shipments by end of 2013-2014 could be difficult.

However, he was hopeful that despite odds, exports would achieve a 20 per cent growth in the current fiscal.

Asked what could the government do for the export sector, given the tight fiscal conditions, Sharma said, "It is a question of supporting labour-intensive sectors. We have to take a holistic view to ensure that we should remain competitive globally. It is important for India to have a sustained thrust on exports," he said.

Finance Secretary R S Gujral, who was also present in the BoT, said: "The depreciation of rupee prima facie would help exporters in terms of higher realisation in terms of rupee... overall in the long term it would help the exporters". 

Oil and non-oil imports during April grew by 6.96 per cent and 2.11 per cent to USD 13.90 billion and USD 24 billion respectively.

Sharma said before finalising the foreign trade policy, the government would consider factors such as volatility in global prices, demand slowdown in western markets, rupee fluctuation, widening trade deficit and slowdown in global and domestic investment.

The minister also pitched for differential rate of credit for exporters and industry.

"I personally have the considered opinion that the differential rate of credit, that (this) demand has a very strong and justified case. We hope a fine balance will be there so that investment climate and productivity improves," Sharma said.

The drop in the balance of trade (BoT) deficit should reduce pressure on the rupee which has lost value by about 15 per cent against the US dollar since September, 2011.

It closed at Rs 55.54 today.

Although exporters community too said that the rupee depreciation would help in long term, but buyers are pressuring for discounts.

"Buyers are asking for more and more discounts," FIEO President Rafeeq Ahmed said.

In 2011-12, the country's trade deficit jumped to USD 185 billion, the highest ever in the history. Exports grew by 21 per cent to USD 303.7 billion during the last fiscal.

The country's economic growth has also slipped to 6.5 per cent in 2011-12, the worst in nine years.

Among others who attended the BoT meeting included, Chanda Kochar (MD, ICICI Bank), Y C Deveshwar (Chairman, ITC) and presidents of CII, FICCI and ASSOCHAM.

Some members of the BoT such as Anand Mahindra, Biocon chief Kiran Mazumdar Shaw, TVS Motors Chairman Venu Srinivasan, Ashok Leyland MD R Seshasayee, Apollo Tyres CMD Onkar S Kanwar and Hero MotoCorp MD Pawan Munjal, could not attend the meeting.

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