India’s exports surged nearly 82 per cent in July as demand soared for engineering goods, petroleum products and readymade garments, but a top official warned bleak global economic outlook may prevent the sector from achieving its annual growth target.
India’s exports grew a record 37.6 per cent to $246-billion (U.S.) in the 2010/11 fiscal year as Asia’s third-largest economy pulled away from the 2008 global financial crisis-led slowdown and set its sights on developing new export markets in the emerging world.
The sector has shown strong growth in this fiscal year as well, with exports racking up high double-digit growth in consecutive months and notching $29.3-billion in July alone, in line with the Asian giant’s rising global economic ambitions.
Buoyed by the robust growth momentum, India was chasing an annual 25 per cent exports growth target in this fiscal year. However, Trade Secretary Rahul Khullar said on Thursday that achieving $300-billion exports in the 2011/12 fiscal year, which ends next March, would be tough.
“Exports have done well, but there is no need for complacency,” Mr. Khullar told reporters. “You are not going to get good news for ever and ever.”
Exporters have become jittery following Standard and Poor’s rating downgrade of the United States, which has roiled global markets and renewed fears of another global economic slowdown. Debt worries in the European Union, India’s largest trade partner, have also weighed.
Indian exports were badly hit in 2008, after the global financial downturn crimped demand for Indian goods in premier overseas markets like the U.S. and Europe.
Mr. Khullar, however, said the government this time is better prepared to handle the slowdown.
“We recognize it is going to hurt us … we know what the warning signs are.”
On Monday, Mr. Khullar had said India “would be lucky” to achieve 20 per cent annual exports growth in 2011/12, and warned exports growth is expected to slow down from August-September.
While exports continued their robust performance in July, imports jumped 52 per cent from last year to $40.4-billion on a higher oil import bill, widening the country’s trade deficit.
India’s oil import bill for the month stood at $11.45-billion, accounting for 28 per cent of its total imports.
However, imports of machinery and electronic items slowed down during the month, pointing to a slowing industrial activity in Asia’s third-largest economy.
The trade deficit widened to $11.1-billion from $7.7-billion in June.