Indian exports, which bore the brunt of the global economic slowdown this year, will likely remain sluggish in 2013 due to a slowig economy at home and challenging economic conditions in the West.
The year started on a double-digit growth for exports, but gradually declined and finally entered the negative territory in May. Outbound shipments grew by 10% in January 2012, before contracting by about 5% in May, with no major turnaround since then.
The government's effort to diversify from the traditional markets of the US and Europe, which account for about one-third of India's exports, yielded positive results but dependence on western economies have led to decline in the country's overall merchandise shipments.
Although India's exports surpassed the $300-billion mark and reached $307 billion in 2011-12, the country's trade deficit also touched an all-time high of $185 billion during the period.
Trade deficit widened to $176 billion during January-November 2012 compared to $147 in the year-ago period.
A widening trade gap directly impacts a country's current account deficit and domestic currency. India's current account deficit stood at 3.9% of GDP during the April-June quarter.
Any ripple worldwide will impact India's commerce as the country's integration with the global trade has reached a high level, said commerce secretary SR Rao.
"In an increasingly interdependent world, economic shocks in one region can quickly spread to others," World Tarde Organisation director-general Pascal Lamy had said earlier.
"Domestic issues like poor infrastructure, increasing transactions cost and some procedural hurdles are huge challenges for exporters," said Federation of Indian Export Organisations president Rafeeq Ahmed.