India’s exports took a big knock in July, contracting 14.8% on year to $22.4 billion on the back of slowdown in the key markets of US and Europe.
“The world trade contraction is getting worsened. The worst fear of European sovereign debt crisis is really impacting the world trade. In the US markets also the appetite has substantially come down...Days coming ahead are tough,” Commerce Secretary S R Rao told reporters on Tuesday.
Reflecting slowdown in the economy, imports too declined by 7.61% to $37.9 billion in July leaving a trade deficit of $15.5 billion. “Trade deficit has fallen but not very comfortably,” Director General of Foreign Trade, Anup Pujari, said.
During the April-July period of 2012-13, exports have shrunk by 5.06% to $97.6 billion. Imports during the period dipped by 6.47% to $153.2 billion.
Rao said due to the demand slowdown in the US and Europe, it is a stiff challenge to achieve the exports target of $350 billion set up for the current fiscal.
Asked whether the government is planning to provide more incentives to exporters, he said there is need to take more steps to reduce transactions cost of exporters to increase competitiveness of Indian goods in the global markets.
“We will have to reassess our tactical steps...Several such steps would be taken...We need to focus on how to reduce transactions cost within our own economy,” he added. The last time when exports witnessed such a steep fall was in August 2009 when they had fallen 23.5% then.
Commenting on the trade data, Planning Commission Deputy Chairman Montek Singh Ahluwalia said the global economic situation is a cause of worry.
“The global economy is not looking very good. Prospects for Europe in current year is something like zero growth with negative in some countries. So I think, all countries including India are facing global environment that is not supportive. Trade deficit does pose challenge,” he said. Trade deficit in April-July stood at $55.6 billion.