The country’s merchandise exports grew year-on-year by 23 per cent to $10.57 billion in April, the first month of the current financal year but imports grew by as 40.7 per cent over the same period, widening the trade deficit by as much as 79 per cent, government data released on Friday said.
The recent appreciation in the value of the rupee, which has risen by about 10 per cent since the new fiscal year began, did not quite show up in the figure apparently linked to shipments booked earlier. Exporters also hedge their risks to cushion the adverse impact of the currency movement on their competitiveness.
On a month-on-month level, exports fell in April from $12.58 billion in March. However, in the previous year, too, exports in April, at $8.59 billion, had fallen from $10.59 billion in March, indicating a seasonal movement than one induced by currency fluctuation.
Commerce Minister Kamal Nath asked exporters to come up with suggestions so that the government could come up with a package to soften the impact of the strong rupee.
Imports rose 40.7 per cent in April to $17.63 billion from $12.53 billion a year earlier, the Commerce Ministry said in a statement.
In rupee terms, exports grew by 15.4 per cent year-on-year to Rs. 44,572.18 crore in the month of April, while imports grew by 31.9 per cent. At this level, the average export realisation would be around Rs. 42 rupees per US dollar, which is above the current rate of around Rs 40.5.
Non-oil imports rose by as much as 54.3 per cent in the month at $13.2 billion, showing a higher hunger for overseas goods in the growing economy, which consumes more raw materials to feed growth while increasing affluence and a weaker dollar also make many imported goods more affordable.
With imports up, the trade deficit for April 2007 is estimated at $ 7.06 billion, up 79 per cent from $3.94 billion a year ago.
Speaking at an awards function organized by the Engineering Exports Promotion Council, the Commerce Minister said employment-intensive industries which do not have high import dependence need to be supported.
"Industry should give specific ideas on which the government can work so that a package can be formulated for them," he said.
Nath, while asserting that the government does not artificially calibrate the rupee, said the proposed package could be in the form of a scheme to refund local taxes that exporters have to pay.
He said the government was pressing for greater access to Indian exporters to the developed markets at the World Trade Organisation.