Exports buck slowdown, grow record 82% in July

THE GOOD NEWS

New Delhi: Exports grew at their fastest pace ever, clocking an 82% rise in July to touch $29.3 billion at a time when there are renewed slowdown fears in the key markets of Europe and the US. 

    A bulk of the increase 
was on account of a robust show put up by engineering, petroleum products and textiles, which accounted for over half the exports during the month. But the data released on Thursday came with a word of caution from the government, with commerce secretary Rahul Khullar saying the rapid growth would start slowing this month onwards due to the economic slowdown in developed economies. "The steep increase is because of the lag between the time orders are placed and when they are delivered," he said.Exports ahead of projected growth rate 
New Delhi: Cautioning that the growth would begin to slow down, commerce secretary Rahul Khullar said, "Let's not forget that the first few months of the year were kind to the West. But the mood has changed over the last few months... Enjoy it while you can. You are not going to get good news forever." 
    At the moment, exports are well ahead of the projected growth rate for the year, with the value of shipments out of India increasing by 54% during April-July to $108 billion. So, over the remaining eight months of the current financial year, exports need to rise a little over 5% to meet the $293 billion target. The growth in July has overtaken the 65% rise witnessed in March 2004, which was the previous record as far as monthly growth is concerned. 
    The government expects sectors such as textiles and gems and jewellery to witness some pressure due to sluggish economic growth in large parts of developed markets, which account for nearly half of India's exports. "Orders for next summer will start trickling in now. So, we expect some friction," said A Sakthivel, one of the large garment exporters based in Tirupur. 
    In the first four months of the financial year, readymade garments posted a 42% rise in exports to reach $5 billion, while man-made fibre shipments went up 38% to $1.78 billion. But this fades in comparison to engineering exports. This product segment saw exports of $8.6 billion in July—which means the exports were more than the entire textiles exports of $8.4 billion (garments, man-made fibre and cotton yarn) during April-July 2011. For the first four months, export of engineering goods, ranging from manhole covers to auto parts, touched $31.6 billion. 
    The story was similar in case of petroleum, oil and lubricants, with exports going up 60% to $18.6 billion. But here it is more of value addition that takes place since Indian refiners such as Reliance essentially import crude oil, process it and ship them. 
    How much of the crude was imported for re-exports is difficult to tell. But the value of crude imports rose around 23% to $42 billion during the first four months. Imports as a whole grew 51.5% during July and given that exports grew at a faster clip, the trade deficit widened marginally. 
    But there was some bad news in store too from the import numbers. Machinery, electronics and gold imports declined in July, compared to June 2011. This could be just one more indicator of a slowdown in the industrial sector. 
    But given that exports are rising, it is providing some comfort to local manufacturers who are seeing demand in the domestic markets decline due to higher interest rates and rise in cost.