India's exports shrink for first time in 3 years

India’s exports fell for the first time in seven years by 12 per cent in October on sagging demand from the world’s two biggest consumer markets — the US and Europe — widening the trade deficit further. Exports in October 2008-09 declined 12.1 per cent to $12.8 billion from $14.58 billion a year ago, causing job losses in the sector, while merchandise imports grew by 10.6 per cent to $23.36 billion from $21.12 billion in the year-ago period. As a result, trade deficit ballooned by over 61 per cent to $10.53 billion.

Imports in September were up by a huge 43.3 per cent on account of government easing restrictions and the impact of the crude oil prices which have since dropped sharply. The negative trend in October took its toll on the April-October 2008-09 export performance which showed an improvement of 23.7 per cent at $107.79 billion. The growth remained above 30 per cent in first half of the year.

Exporters doubt the possibility of achieving the target of $200 billion in the current fiscal given the slowdown in the US and Europe. “The target would not be achieved. The grim situation would continue, especially in the traditional sectors like handicraft, textile, carpets, marine products, leather and agro and agro products,” said the director-general of the federation of indian export organisations, Mr Ajay Sahai said.

Industry officials have estimated that five lakh handicrafts workers would lose their jobs, while commerce secretary, Mr G.K. Pillai had on November 21 said that textile ministry estimates suggests a loss of another five lakh jobs in the sector in the next five months.
Total imports during April-October 2008-09 were $180.78 billion against $132.78 billion in the same period last year.

Oil imports during October were billed at $7.96 billion, 22 per cent more than $6.52 billion in the corresponding month last year. Non-oil imports during the month were up only by 5.5 per cent at $15.4 billion from $14.6 billion a year ago. One of the reasons for fall in exports was lack of credit for exporters, Crisil’s principal economist, Mr D.K. Joshi said, adding that steps taken by the RBI would improve credit situation. He said the exports would not remain in negative territory for long. However, “the demand (from the US and Europe) would continue to be sluggish due to the slowdown”.