Hurt by a rising rupee, the country’s export growth has slumped while import growth has surged, resulting in the trade deficit yawning by a whopping 74 per cent in the first quarter of the fiscal year, government trade data revealed on Wednesday.
The Commerce Ministry said exports in June totaled $11.867 billion, up 14 per cent from $10.4 billion in the same month last year. That compared with a year-on-year growth of 18 per cent in May.
Merchandise imports in June, at $19.19 billion, were 36.7 per cent higher than the same month last year, while import growth in May was 26 per cent.
The trade deficit for April-June, 2007 was estimated at US $ 20.6 billion, 74 per cent higher than $11.84 billion in the same quarter a year ago.
The figures clearly showed a surge in imports because it is cheaper to buy US dollars now – and that is causing problems for exporters, who find their competitiveness eroded.
The Federation of Indian Export Organisations (FIEO) said in a statement the decline in exports only strengthened fears among exporters that exports may dip to single-digit growth.
Exports have declined further after showing growth of 23 per cent in April 2007 to 18 per cent in May. The rupee has gained about 10 per cent since January this year, when it cost about Rs. 44 to buy a US dollar. It hit a nine-year high last week.
“Indian exporters are hardly signing new contracts in view of uncertainty on the ange front which does not augur well for the exports in the coming months,” FIEO president Ganesh Kumar Gupta said, calling for government measures to offset the losses exporters incurred in a volatile foreign exchange market.
Foreign fund inflows in the share market have been a key support for the rupee. Foreigners have bought nearly $10.5 billion worth of shares so far in 2007, just below a record $10.7 billion in 2005 and much higher than nearly $8 billion in 2006.