Exports up 30% in June, but China fears build up.

NEW DELHI: India’s exports grew by over 30% for the fifth straight month in June to $17.75 billion indicating a possible turnaround in global economy, amid a slowdown in China and lingering concerns over the Euro zone.

In absolute terms, the exports are still below the levels seen in 2008, indicating that the high growth rate is partly due to the base effect, reflecting a sluggish 2009 when exports contracted by 5%.

“My sense is that there is some good news,” commerce secretary Rahul Khullar said addressing a press conference on Monday, but quickly added that it was not great news yet.

Exports grew 32% to $ 50.8 billion in April-June 2010 from a year ago, while imports rose 34% to $83 billion during the period, data on Monday showed. In the first quarter, a number of sectors such as engineering, chemicals, pharmaceuticals, gems & jewellery and iron ore notched up impressive growth rates. “While the steady increase in exports in these sectors seems to be signalling that some turnaround is underway, it could be just a blip,” Mr Khullar said.

His view was endorsed by the engineering goods industry, which has done well in the last four-five months. But exports are lower compared with the same period in 2008-09.

“Orders have started coming in, but we have some way to go,” said Aman Chadha, chairman of Engineering Goods Exports Promotion Council.

Uncertainty linked to the Euro zone continues to worry exporters. “A number of exporters are complaining about not getting payments from buyers in Europe on time. Now that government spending is cut in parts of Europe, it could result in a further fall in demand,” Chadha said. The government was aware of the problems in Europe, but has decided to watch the situation for a while. “There is definitely a problem there (in Europe). I prefer to wait till numbers of geographical distribution come in,” Mr Khullar said.

China’s lowering of export projections for the year is another factor which could affect exports from India. Since China’s estimates of lower exports is mainly due to its decision to produce less, its demand for raw materials like iron ore from India would also fall.

Imports increased at a lower rate of 23% in June mainly due to a fall in global crude prices and a slower growth in the country’s oil imports. Increase in imports of inputs such as machinery, coal, chemicals and iron & steel seems to be in tandem with rising industrial output in the country. Fieo president A Sakthivel said that the country was in course to meet the target of $200 billion exports for the current financial year. He said credit should be available to exporters at the base rates fixed by banks.

Source : economictimes.indiatimes.com