Exports drop 28.4%; demand seen returning next year
New Delhi: India`s exports dropped 28.4 percent in July, the tenth straight month to record a fall, even as the Planning Commission saw a recovery next year when demand returns in rich nations.
The only solace in July was that imports too fell 37.1 percent, narrowing the trade deficit to USD 5.99 billion or nearly half from USD 12.15 billion a year ago.
Merchandise exports was USD 13.62 billion in the month under review as demand continued to remain depressed, but the Planning Commission today said exports would pick up after 2010 when developed markets return to positive growth.
"Exports would also recover as industrialised countries return to positive growth of one percent in 2010 with further acceleration in 2011", it said.
But to prop up the sector, the government in its new Foreign Trade Policy has announced sops for trade with new markets in Latin America and Africa, which by and large remained insulated from the global crisis.
India`s imports fell sharply by 37.1 percent in July to USD 19.62 from USD 31.18 billion a year ago, largely thanks to a drop in crude oil prices.
"The imports declined mainly due to the price effect...oil prices are about 50 percent cheaper than last year," CRISIL Principal Economist D K Joshi said.
Federation of Indian Export Organisations (FIEO) President A Sakthivel said the declining trend is likely to continue for some more months.
"The negative trend (of exports) will continue for a few more months," Sakthivel said, expressing pessimism that USD 170 billion exports for this fiscal is also difficult to achieve.
India has set a target of USD 200 billion for 2010-11.
"It is very difficult to achieve the exports target of 2010-11... demand in the developed markets is still weak," an international trade expert with Indian Institute of Foreign Trade (IIFT) RM Joshi said.
While the country`s oil imports declined by 55.5 percent to USD 5.63 billion from USD 12.67 in July 2008, non-oil imports were down by 24.5 percent to USD 13.98 billion in July 2009 from USD 18.51 billion in the same period last year.
During April-July 2009-10, exports contracted to USD 49.65 billion from USD 75.28 billion. Oil imports in the period dipped by 48 percent to USD 21.96 billion from 42.21 billion in April-July 2008-09.
Non-oil imports in the first four months of this financial year declined by 23.7 percent to USD 56.60 from USD 74.16 in the corresponding period last year.
The trade gap during the period was USD 28.91 billion, down from USD 41.09 billion in April-July 2008-09.
Overseas shipments grew by meagre 3.4 per cent to USD 168.7 billion in 2008-09.
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