Indian Exports Grow 12.4% At Fastest Pace In 7 Months In May

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India’s exports grew by a double-digit pace for the first time in seven months in May, narrowing the trade deficit and setting the ground for easing of restrictions on gold imports.

Exports last month rose 12.4% to USD 28 billion from a year earlier, while imports fell 11.4 % to USD 39.23 billion, the Ministry of Commerce & Industry said.

The twin effect led to the trade deficit narrowing to USD 11.23 billion from USD 19.37 billion a year earlier. However, the trade gap in May was the highest since USD 12.2 billion in July 2013.

 

 

Gold imports, which had in 2013 led to a widening of the trade deficit and consequently a worsening current account deficit (CAD),  fell a sharp 72% in May to $2.19 bln, according to latest data from the commerce ministry.

 

“It is definitely an encouraging sign,” Commerce Secretary Rajeev Kher said. “If this trend sustains then I am sure we are reviving… It seems that they (export products) are now acquiring their natural levels.”

 

He said the appreciating rupee was not a factor in the double-digit export growth. “There is a positive spirit and if this trend continues the next month then I will definitely be saying that there is a revival (in global demand). So, I would like to see the next month also,” he added. Asked about the export target for 2014-15, he said: “We are working towards something like USD 1 billion exports on a daily basis.”

Exports in May increased to USD 28 billion from USD 24.9 billion in May 2013.

 

Sectors that recorded healthy export growth include engineering (22.09 %), petroleum products (28.7 %), ready-made garments (24.94 %), pharma (10 %) and chemicals (13.8 %).The pick-up in export growth in May benefits from a benign base effect and is unlikely to prove sustainable over the coming months, said Aditi Nayar, senior economist at rating agency ICRA, an arm of Moody’s Investors Service. “With monsoon-related concerns clouding efforts to contain inflation, competitiveness of Indian exports would be eroded if the rupee appreciates on the back of healthy foreign institutional investor inflows,” she said.

 

In April-May period, exports grew 8.87 % to USD 53.63 billion. Imports during the first two months of this fiscal dipped 13.16 % to USD 74.95 billion, leaving a trade deficit of USD 21.3 billion.

 

Oil imports increased 2.5% in May to USD 14.46 billion. Non-oil imports in May dipped 17.9 % to USD 24.76 billion. On agri exports, in view of a possible deficit in the monsoon, Kher said: “Our approach to agri exports is broadly nuanced by the fact that agri exports as far as possible should be open but clearly they are underlined by the attenuating factors of domestic demand and supply.”

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