India’s exports fell 4.2% in May as the impact of the slowdown in key markets such as Europe and the US cast its shadow on shipments to these destinations. Data showed exports fell to $25.7 billion compared to $26.8 billion in the same month a year earlier. During May 2012, the imports also declined 7.4% to $41.9 billion. The trade deficit stood at $16.3 billion in May compared to $18.5 billion in the same year-ago month.
Exports in April-May stood at $50.1 billion, posting a decline -0.7% compared to the same year-ago period, while imports during April-May fell 2.4% to $80 billion. The figures are provisional and may change when final data is compiled.
Slew of data in recent days have shown the extent of the slowdown which has gripped Asia’s third-largest economy. The slowdown in exports comes as another policy headache for the government already battling a slowing economy. The impact of the industrial slowdown was visible in the trade data as import of machinery and electrical equipments fell sharply. Industrial output growth in April remained flat at 0.1% after declining 3.2% in March.
The government had earlier cautioned that 2012-13 would be a tough year for exports due to the slowdown in key markets. It crossed the $300 billion target set for 2011-12 and has set a target of $360 billion for the current fiscal. Policymakers expect the market diversification strategy to help in overcoming the slowdown in the key markets. The government is looking at Asian, African and Latin American markets to boost exports.
The slowdown in exports was across sectors except a few segments, which showed some feeble signs of expansion. Engineering exports, which performed strongly last year, were down 15.7% at $ 4.9 billion, petroleum, oil and lubricants exports fell 26.1% to $4.1 billion, while gems & Jewellery exports were down 9% at $3.6 billion; Drugs and pharmaceuticals exports were up 10.6% at $ 1.1 billion) while readymade garments declined 15.8% at $ 1 billion.
The impact of the government’s efforts to stem gold imports was visible in the data. Gold imports were down 52% at $4.3 billion.