Exports grew 10 p.c. in Jan to $25.34 bn

NEW DELHI, INDIA: Despite weak demand in the Western markets, India's exports grew 10.1 per cent in January at $25.34 billion, official data showed on Thursday, widening the monthly trade deficit to $14.76 billion.

The rate of growth in exports has improved in January, compared to 6.76 per cent increase seen in December and 3.87 per cent in November.

But is is still substantially lower than the average for April-January at 23.47 per cent. Fragile economic conditions in Europe and the US have been impacting exports.

The cumulative value of exports for the period April-January increased to $242.79 billion as compared to $196.63 billion during the corresponding period of previous year, according to data released by the ministry of commerce and industry.

The government has targeted increasing exports to $300 billion in the fiscal ending March 31. However, analysts say that given the sharp decline in exports growth in the third quarter of the fiscal, it may not be possible to achieve the target.

The more worrying trend is a sharp increase in imports despite moderation in exports growth, which has widened the trade deficit.

In January, imports rose 20.25 per cent to $40.1 billion and in the first ten months of the current fiscal they have risen by 29.4 per cent to $391.45 billion.

Trade deficit during April-January was at $148.66 billion and the government expects this to go beyond $160 billion for the year ending March 31.

Commerce secretary Rahul Khullar has said that the exports and imports may touch about $300 billion and $460 billion, respectively. The balance of trade would be around $160 billion. He has also cautioned that the exporters community would face demand problem in 2012-13 as well.

However, FIEO president Rafeeque Ahmed said that 2012 would be a difficult year for exports in view of growing uncertainty in the Euro Zone, slacking of demand in other advance economies and third country effect on our exports to emerging economies.

FIEO chief suggested that the government should look at the ways and means for making exports competitive by reducing the cost of credit across the board for export sector or providing interest subvention of over 3 per cent to bring the export credit to close to 7 per cent.

Various tax matters including TDS on foreign agency commission needs to be clarified so as to remove any ambiguity and impart little competitiveness. State governments should provide expeditious refunds of the VAT paid on input used in exports.

In the given circumstances, Ahmed demanded for stability of the Policy providing duty neutralization and promotional benefits of exports so as to sail through difficult times. The FIEO president said that exports may be in the range of $285-290 billion this fiscal.