New Delhi: Indian exports, which were hit by global slowdown last year, are likely to remain sluggish during 2013 as well due to challenging economic conditions in western economies, though policymakers have drawn a strategy to diversify exports.
The year started on a double-digit growth for exports, but gradually declined and finally entered the negative territory in May.
In January 2012, outbound shipments grew by 10 per cent before contracting by about 5 per cent in May, with no major turnaround since then.
The government's effort to diversify from the traditional markets of the US and Europe yielded positive results but dependence on the western economies have led to decline in the country's overall merchandise shipments. These two market accounts for about one-third of India's exports.
Although India's exports surpassed the USD 300-billion mark and reached USD 307 billion during 2011-12, the country's trade deficit also touched an all-time high of USD 185 billion in the period.
During January-November 2012, the trade gap has widened to USD 175.5 billion compared to USD 146.9 in the comparable period last year.
For government, it is a major cause of concern, as widening trade gap directly impacts current account deficit (CAD) and domestic currency. CAD stood at 3.9 per cent of GDP in the April-June quarter.
Due to the global demand slowdown, India's exports during the current fiscal are likely to barely cross USD 300 billion against the ambitious target of USD 360 billion for the current fiscal.
According to the Commerce Secretary S R Rao, any ripple worldwide will impact India's commerce as the country's integration with the global trade has reached a high level.
Slowing global output growth has led to World Trade Organisation (WTO) cut its 2012 forecast for world trade expansion to 2.5 per cent from 3.7 per cent and to scale back the 2013 growth estimate to 4.5 per cent from 5.6 per cent.
"In an increasingly interdependent world, economic shocks in one region can quickly spread to others," WTO Director General Pascal Lamy has said.
Federation of Indian Export Organisations (FIEO) has said the year 2012 had been difficult for exporters.
"Domestic issues like poor infrastructure, increasing transactions cost and some procedural hurdles are huge challenges for exporters," FIEO President Rafeeq Ahmed said.
Sharing similar views, Rakesh Mohan Joshi, internal trade expert and Professor with India?s prestigious Indian Institute of Foreign Trade (IIFT) said the ballooning trade deficit poses serious challenges to the government.
First Published: Friday, December 28, 2012, 12:51