Exports plunge in October on global downturn; may miss target

New Delhi, Dec 1 (PTI) India's exports fell for the first time in seven years by 12 percent in October on sagging demand from the world's two biggest consumer markets -- the US and Europe -- widening the trade deficit further.

Exports in October 2008-09 declined 12.1 percent to USD
12.8 billion from USD 14.58 billion a year ago, causing job
losses in the sector, while merchandise imports grew by 10.6
percent to USD 23.36 billion from USD 21.12 billion in the
year-ago period.

As a result, trade deficit ballooned by over 61 percent
to USD 10.53 billion.

Imports in September were up by a huge 43.3 percent on
account of government easing restrictions and the impact of
the crude oil prices which have since dropped sharply.

The negative trend in October took its toll on the
April-October 2008-09 export performance which showed an
improvement of 23.7 percent at USD 107.79 billion. The growth
remained above 30 percent in first half of the year.

Exporters doubt the possibility of achieving the target of
USD 200 billion in the current fiscal given the slowdown in
the US and Europe.

"The target would not be achieved. The grim situation
would continue, especially in the traditional sectors like
handicraft, textile, carpets, marine products, leather and
agro and agro products," Director General of Federation of
Indian Export Organisations Ajay Sahai said.

Industry officials have estimated that five lakh
handicrafts workers would lose their jobs, while Commerce
Secretary G K Pillai had on November 21 said that Textile
Ministry estimates suggests a loss of another five lakh jobs
in the sector in the next five months.

Total imports during April-October 2008-09 were USD
180.78 billion against USD 132.78 billion in the same period
last year.

Oil imports during October were billed at USD 7.96
billion, 22 percent more than USD 6.52 billion in the
corresponding month last year.

Non-oil imports during the month were up only by 5.5
percent at USD 15.4 billion from USD 14.6 billion a year ago.

One of the reasons for fall in exports was lack of credit
for exporters, Crisil's Principal Economist D K Joshi said,
adding that steps taken by the Reserve Bank of India (RBI)
would improve credit situation.

He said the exports would not remain in negative
territory for long. However, "the demand (from the US and
Europe) would continue to be sluggish due to the slowdown".

Last week, Reserve Bank extended the time period for
concessional credit from 90 days to 180 days.

"If the sentiments in the European market continue to
remain the same, the apparel exporters will bear the brunt as
people stop spending on clothes," Apparel Export Promotion
Council Chairman (AEPC) Rakesh Vaid said.

The AEPC had said the industry was facing huge losses on
account of drying up of orders from the US and European
markets in the backdrop of financial crisis. Garment exports
may drop to USD 8.78 billion in this fiscal, 24 percent below
the target set for 2008-09.

In 2007-08, India had exported USD 9.69 billion worth of
apparel.

In the wake of job losses being reported from different
segments, like textiles and handicrafts, the Commerce Ministry
has suggested a package, which has to be cleared by the Prime
Minister-chaired committee. PTI RK