Exports fall in FY13; March pick-up offers c/a relief

NEW DELHI Thu Apr 18, 2013 2:06pm IST

1 of 2. A small trawler passes in front of merchant vessels anchored outside the port of Mumbai, April 9, 2013.

Credit: Reuters/Vivek Prakash

Related Topics

Stocks

   

NEW DELHI (Reuters) - India's exports fell 1.8 pct in the 2012/13 fiscal year, the trade ministry said on Thursday, but they were up for the third straight month in March, offering some relief to the record current account deficit.

The current account deficit has emerged as a big weak spot in Asia's third largest economy since last year. It is expected to have hit about 5 percent of GDP in the fiscal year that ended in March, but a fall in gold and oil prices along with the uptick in exports since January should take some of the pressure off.

Exports rose 6.97 percent year-on-year in March to $30.84 billion, while imports fell 2.87 percent to $41.16 billion, driven by lower spending on oil purchases that month, the ministry said. That reduced the trade deficit in the month to $10.32 billion.

The government of Prime Minister Manmohan Singh has been worried about the impact of falling exports on the overall economy, which likely registered its weakest growth in a decade in the last fiscal year. The trade gap has put pressure on the rupee, feeding inflation.

India GDP, exports: link.reuters.com/qaw46s

Exports for the full year were $300 billion, well below a $350 billion target but higher than expected. The rupee extended gains to trade at 54.12/13 as of 11.30 a.m. after the trade figures were released.

Trade Minister Anand Sharma, who gave the full year figures at a meeting of exporters, also announced incentives for external trade.

"We are conscious of the need to enhance exports so that we can address the real challenge of bringing down the trade account deficit, which directly impacts the current account deficit," Sharma said.

The measures included a 2 percent interest rate subsidy for the beleaguered textile industry, which was once a mainstay of the Indian economy but now struggles to compete with China and Bangladesh for the European and U.S. markets.

"It is a step that's come too late but is nevertheless welcome," said R.K. Dalmia, senior president of Century Textiles (CNTY.NS). "It will make sure this sector and the country's exports revive again...It's a big boost."

India imports almost all its energy needs, and spent $169 billion on foreign oil in the full fiscal year, 9 percent more than the year before, a big factor driving the current account deficit.

The annual export contraction revealed on Thursday was the first since 2009/10 and reflected falling orders from the U.S and Europe. Exports have grown in all but four years since 1970/71, Reserve Bank of India data shows.

Sharma said the government had relaxed the rules for special economic zones that have been major drivers for Indian exports in recent years. He also said he was confident a long delayed trade and investment agreement between India and Europe that is expected to significantly increase Indian exports would reach "closure" within the next couple of months.

Finance Minister P. Chidambaram said on Wednesday the current account deficit could be halved in one to two years.

"If exports rise sharply, if the oil prices soften more quickly, the current account deficit could be contained at 2.5 percent even by next year," he told reporters in New York during a visit to woo back investment in the country's ailing economy.

(Reporting by Manoj Kumar and Rajesh Kumar Singh; Editing by Frank Jack Daniel and Sanjeev Miglani)

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

REUTERS SHOWCASE

Earnings Season

Earnings Season

Reliance Q4 sales rise, refining margin narrows.  Read 

Innovative Solution

Innovative Solution

Turning smog into jewels - a Dutch designer's solution to Beijing's pollution.  Video 

Insider Trading

Insider Trading

Rajaratnam's brother loses bid to dismiss insider trading charges.  Full Article 

Literary Giant Dies

Literary Giant Dies

Mourning and memories in Gabriel Garcia Marquez's languid hometown.  Full Article 

S&P on India

S&P on India

S&P: India's ratings to depend on next govt econ, fiscal policies.  Full Article 

Ambitious Aim

Ambitious Aim

In green car race, Toyota adds muscle with fuel-cell launch.  Full Article 

Bond Market

Bond Market

A star abroad, RBI boss riles bond traders at home  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage