The lingering economic crisis in Europe and the United States will affect India's merchandise as well as services exports in the financial year beginning April 1, according to the Economic Survey for 2011-12 tabled in parliament on Thursday.
The survey, tabled by finance minister Pranab Mukherjee, said the country's overall economic growth and earnings from tourism will also suffer due to slowdown in European and US economies.
The survey points out that despite the market diversification, Europe and the US continued to be among the biggest trading partners and an important source of tourists and services exports.
“Europe still has a 19.5% share in India’s exports. Besides, some of India’s trading partners are dependent on Europe, thus affecting the country’s trade indirectly,” it said.
India's exports grew by 23.5% to $242.8 billion in the first 10 months of 2011-12.
However, the growth in exports, which was moving robustly at 40.6% during the first half of this fiscal, began to decelerate during the months of October and November, owing to the Euro zone crisis, before recovering back to 6.7% and 10.1% in December 2011 and January 2012 respectively.
The survey said India's foreign trade has registered healthy growth in the last few years helped by product and market diversification policy adopted by the government.
An interesting development in the direction of India’s trade is that the US, which was in the first position in 2007-08 has been relegated to the third spot in the following years, with the United Arab Emirates becoming India’s largest trading partner, followed by China.
India's imports during April-January period grew by 29.4% to $391.5 billion.
Trade deficit during April-January 2011-12 was $148.7 billion as against $105.9 billion during the corresponding period of last fiscal.
India’s services exports, which had recorded a contraction of 9.4% in 2009-10 due to the global financial crisis bounced back to grow by 38.4% to $132.9 billion in 2010-11.
However, growth in export of services moderated during the first half of 2011-12 to 17.1% compared to 32.7 % during the first half of 2010-11.