Recording the highest trade deficit in last seven months, India’s exports entered the negative zone after a gap of four months, recording a contraction of 1.1 per cent in May. This led to a trade deficit of $20.1 billion.
According to Commerce Secretary S R Rao, the decline in shipments is mainly due to the steps taken by the government to suspend gold trading in special economic zones (SEZs). Gold exports from SEZs in May declined by $0.8 billion. This apart, weakness in the European markets has also impacted exports growth, he added.
The Secretary said hopefully from June, exports will bounce back as gold trading activities have started again in SEZs.
The country’s exports in May stood at $24.51 billion compared to $24.78 billion in the same month of 2012. Imports in May grew by 6.99 per cent to $44.65 billion.
“As far as trade deficit is concerned, it is very worrisome. It is largely contributed by heavy imports of gold and silver,” Rao said, adding the main exporting items like textile and engineering are registering healthy growth.
Gold and silver imports, during the month under review, grew by 89 per cent to $8.39 billion. During April-May period, it grew by 109 per cent to $15.88 billion.
However, exports during the first two months of the fiscal grew by 0.21 per cent to $ 48.67 billion. Imports during the period were up by 8.88 per cent to $86.6 billion.
Oil and non-oil imports in May grew by 3 per cent and 9.1 per cent to $15 billion and $29.62 billion respectively.
Oil imports during April-May 2013-14 grew by 3.47 per cent to 29.10 billion compared to $28.13 billion in the corresponding period last year. Non-oil imports during the period was up by 11.84 per cent to $57.49 billion.
“We have now made it mandatory that even in SEZ, gold units shall comply with the
DGFT notification of minimum value addition of 3 per cent in gold jewellery and 5 per cent in gold and precious stone studded jewellery,” Rao said.
The biggest trade gap of $21 billion was recorded in October, 2012.
He said although the US market is improving, the EU is still not out of the woods. Both the markets accounts for about 30 per cent of India’s exports.
On the impact of rupee fall on exports, Director General of Foreign Trade (DGFT) Anup Pujari said it does not benefit much for exports because of high import content in the India’s major shipments (like pharmaceuticals and gems and jewellery).
Apparel Exports Promotion Council (AEPC) Chairman A Sakthivel said garment sector continues to do well due to various factors. “The better compliance practices adopted by factories and efforts made by AEPC by organising several fairs overseas have yielded results,” Sakthivel said.
Source : newindianexpress.com