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October exports growth up by 12.4% on slow demand from developed markets; imports increase by 36.7%

India's exports growth slumped in October, as demand slackened from the developed markets, widening the country's trade deficit to a four-year high.

Exports grew 12.4% to $19.9 billion in October from a year ago, much slower than 36.5% in September and 52% in the April-September period, data released on Tuesday showed. Imports in October 2011 stood at USD 39.5 billion registering a growth of 21.7%. Balance of Trade for the period was USD 19.6 billion.

"We have been saying that exports are going to slow down in the second half of the fiscal. It happened a month late, but the chickens have come home to roost," Commerce Secretary Rahul Khullar said.

The slowdown was across the board, hitting all sectors.

Trade deficit for the month was almost the same as exports at $19.6 billion, as imports increased 36.7% to $39.5 billion.

"It is clearly something to be very worried about. At this rate, our annual trade deficit could reach $150 billion," Khullar said.

The deficit was $93.7 billion in the April-October period, against $72 billion in the year-ago period.

Cumulative Export figures for the period of April to October 2011 stood at USD 179.8 billion registering a growth of 46%. Imports for the same period stood at USD 273.5 billion registering a growth of 31%. Balance of trade for the period stood at USD 93.7 billion.

During April to October 2011, the following sectors have done well viz.
Engineering, (USD 51.4 billion) which registered the growth of 89.6 % over the last year
Petroleum & oil products, 51% (USD 31.9 billion)
Cotton 22% (USD 3.99 billion)
Electronics 50% (USD 6.4 billion)


As regards to imports during April to October 2011, the growth estimates on the following sectors are:
POL, 41% (USD 81.9 billion)
Gold and silver 64% (USD 38.3 billion)
Machinery, 27.8% (USD 20 billion)
Electronics, 22% (USD 19.7 billion)


While exports in the remaining months of the fiscal are expected to be relatively low, compared with the high growth phase in the first half of the fiscal, high global oil prices and fertiliser imports will check a sharp slowdown in imports, putting pressure on the country's current account deficit and balance of payments.

The current account deficit is likely to be about 3% of GDP or slightly higher this year. But the situation could have been much worse if the performance in the first few months of the fiscal had not been robust, said Madan Sabnavis, chief economist at Care Ratings.