'Global concerns weighing heavily on Indian exports'

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SME Times News Bureau | 19 Jun, 2013
Exporters' association FIEO has viewed that global economic concerns are weighing heavily on Indian exports, as indicated by the recently released exports figure for the Month of May.

Country's exports have declined by 1.1 percent y-o-y to USD 24.51 billion in May 2013. Imports during May, were valued at USD 44.64 billion representing a growth of 6.99 percent y-o-y. The trade deficit in May reached USD 20.14 billion in comparison to USD 17.8 billion in the previous month.

Exports figure for the Month of May are indicative of the fact that the global recovery is still weak. The global growth has been uneven. We have seen few green shoots in countries like USA and Japan but Euro area continues to be a cause of concern, said Federation of Indian Export Organisations (FIEO) President M Rafeeque Ahmed.

He added that even in some large emerging economies like China, Brazil, Russia, South Africa, etc. sluggish external demand and lack of investment are pulling down economy activity.

China, World's top most exporter, has also showed a growth of 1% in its exports for the month of May while its imports were down by 0.3%.

On rupee depreciation, he viewed that has not pushed exports as demand is low, other currencies are also depreciating, import intensity of exports are on increase and high inflation is pushing input cost.

While increasing trade deficit, primarily on account of non-oil import and gold and silver import in particular is a cause of concern, Ahmed said that we may be seeing some decline in trade deficit, due to softening of commodity prices (other than crude) and dip in gold import subsequent to imposing of restrictions by RBI and hike in import duty, in coming few months.

The FIEO chief said that he expects the CAD in the current fiscal to moderate.

The status quo in RBI Mid Quarter Monetary Policy Review for June has also not enthused the exporters who are plagued by high cost of credit, said Ahmed.

While recognizing the macro parameters affecting RBI decision, he said that growth should be given a precedence over inflation as growth alone can keep economy on track.

RBI on Monday had kept key policy rates unchanged, after lowering them in each of its previous policy reviews, and warned that the rupee's weakness and rise in administered prices - for instance of diesel - could fuel inflation.