Exports in the red in five years

NEW DELHI: India���s export growth slipped into negative territory for the first time in five years, falling 12.1% in US dollar terms in October as a recession in key developed markets hit global trade. This drop underscores the need for exporters to tap the domestic market.

Exports fell to $12.8 billion in October from $14.58 billion in the same month the previous year, and officials said the government���s export target of $200 billion for this fiscal year would be difficult to meet with demand from key markets such as the US, European Union and Japan likely to stay low in the coming months.

Exporters expect exports during FY09 to be around $185 billion, signalling a bleak outlook for the sector for the remainder of 2008 and all of 2009.

���A turnaround is likely only in the fourth quarter of 2009 and things could get back to normal by the third quarter of 2010. Exporters will have to hang in there and work on thin margins till times get better,��� said Ajay Sahai, director-general of the Federation of Indian Export Organisations, a trade body of several export groups.

Compounding the woes for the government was a 61% rise in the trade deficit ��� which widened to $10.53 billion ��� after imports grew 10.6% to $23.36 billion in October, compared with $21.12 billion a year ago.

Exports, however, grew 8.2% in rupee terms, thanks to a depreciation in the rupee. The rupee fell 20% against the dollar between April and October this year. In dollar terms, too, the export figure for October was slightly better than previously feared. Last month, the director general of foreign trade, RS Gujral, said October exports would fall 15%.

The fall in exports in October dragged down the average export growth for the April-October period to 23.7% from 30.8% in the first six months. The global economic slowdown has hit most export sectors of the Indian economy.

Officials in the commerce department said labour-intensive sectors like textiles, handicraft, handloom, marine, leather, gems & jewellery and agriculture & agriculture products have been affected by the slowdown.

The drop in exports is directly affecting employment. About 500,000 jobs could be lost in the textile sector alone over the next five months, estimates made by the textile ministry suggest. The Centre is looking at a package to address specific problems of employment-intensive sectors.

���In such a precarious situation, it is important that the government stimulates demand in the domestic economy too, so that exporters can focus on the domestic front in the coming months,��� said Federation of Indian Chambers of Commerce and Industry���s secretary general, Amit Mitra.

Although import growth decelerated in October, the cumulative value of imports during the seven months to October stood at $180.78 billion, up 36.2% on year-ago levels.

Oil imports during October were valued at $7.96 billion, up 22% year-on-year. Non-oil imports were estimated at $15.4 billion, up 5.5%. Non-oil imports during the April-October period stood at $115.01 billion, up 25.5% on a year ago.

The trade deficit for April to October was estimated at $72.99 billion, up from $ 45.63 billion during the same period last year.