Exports Jump 23% in Sept, Fastest in 2 yrs.

NEW DELHI: India's merchandise shipments in September rose at its fastest pace in two years, clocking a rise of 23%, or some $18 billion, but the rate of increase in imports outpaced this growth to stir concerns over a widening trade gap.

Exports aggregated $103.3 billion in the April-September period, marking a 27.6% increase from the year-ago period. No wonder, commerce minister Anand Sharma on Monday said the country is on track to surpass the export target of $200 billion for the current fiscal. "In the first six months of this year, we have done well. We are very much on track...to cross $200 billion," Sharma said.

Releasing the figures, commerce secretary Rahul Khullar said the growth could be partly attributed to the low base in the previous year and increasing prices. He said September was the "first month in which exports were higher than (for a particular month) 2008-09".

Exports had recorded a 22.5% growth in August at $16.64 billion. Imports too jumped by a higher rate of 32.2% to $29.7 billion, resulting in a trade deficit of $13.06 billion.

Exporters, meanwhile, are hopeful of topping the target but say rupee volatility and high cost of credit are matters of concern. On Monday, Federation of Indian Export Organisations (FIEO) president A Sakthivel suggested the RBI place restriction on the minimum period of investment by FII of at least 12 months as a measure to check volatility.

At a monetary policy meeting with RBI governor in Mumbai, Sakthivel said FIIs should be allowed repatriation only after investment remains in India for 365 days or more. Highlighting constant decline in export credit as a percentage of net bank credit, which fell to as low as 4.1% as on January 15, he requested that 50% of the total export credit should be earmarked to MSME sectors so as to ensure regular and seamless flow of credit to the export sector.

The issue of non-availability of dollar-denominated credit for exports was also flagged by FIEO as exporters are of the view that banks normally prefer to provide credit to corporates over exporters. Sakthivel sought a clear RBI directive to banks on this.

Referring to increase in export credit rate under the base rate regime, Sakthivel said in the PLR regime, exporters were getting pre- and post-shipment credit at least 2.5% below PLR, if not at lower rate. But in the base rate regime banks are charging export credit 150 to 200 basis points above the base rate which make the export credit rate under the base rate regime costlier.

Source : timesofindia.indiatimes.com