India exported goods worth $25.83 billion in July, a growth of 11.64 per cent - the best in nearly two years - propelled by higher demand for pharmaceuticals, textiles, chemicals and petrochemicals, and a falling rupee.

A sharp fall in gold and silver imports and a modest decline in the oil bill led to a 6.12 per cent decrease in overall imports, to $38.10 billion in July. Gold and silver imports declined sharply to $2.97 billion during July compared to $4.47 billion in the corresponding month last year following the increase in import duties and other curbs imposed recently by the Government.

The trade deficit narrowed, to $12.26 billion during the month, compared to $17.47 billion during July 2012, bringing some relief to policy makers grappling with a high current account deficit and a weakening rupee.

The Government said it was hopeful the export incentives announced recently, including an increase in the interest rate subsidy for select sectors, would help to keep exports on the growth track for the rest of the fiscal.
Up from negative zone

The relatively high growth in exports , following two months of decline and several months of tepid increases, pulled the overall export figure for the fiscal out of the negative zone. Exports posted a 1.72 per cent growth in the April-July period, to $98.29 billion.

Commerce Secretary S. R. Rao said during a press briefing on Monday that export growth should keep pace in the coming months as recent incentives start showing results. While the rupee exchange rate was also helping exporters, Rao said a stable currency helps exporters in their long-term contracts.

“Very few exportis on spot-price basis. What is important is to have a stable currency. The new incentives announced by the Minister should play out in the next couple of months. We expect exports to be doing slightly better,” he said.

Rao added that the export growth target for the year was 10 per cent, and the country should be doing better over the next few months. The Commerce Department's continued focus on new markets such as Latin America, Africa and South East Asia, would also help exporters, he said.

Exporters said continued support from the Government was essential. Although the US market was showing definite signs of improvement, demand from the EU was still unstable, they said.

“The pre- and post-shipment credit rates are hovering around 10 per cent, which is very high when compared to interest rates available to our competitors. The Government should re-introduce separate rates of fixed 7.5 per cent for the labour intensive sectors of clothing and textiles,” Apparel Export Promotion Council chief A. Sakthivel said.

“The Government should continue with its reform process and address the issue of availability of credit and transaction cost related matters with the same zeal so that the momentum continues,” FIEO President Rafeeque Ahmed said.
Other imports too down

Apart from gold and silver, other products that witnessed an import decline included project goods, vegetable oil, and precious and semi-precious stones.

Oil imports during July were 8 per cent lower at $13.816 billion, while non-oil imports, at $25.39 billion, were 5.26 per cent lower than the same month last year.

In the April-July period, imports posted a growth of 2.82 per cent to $160.73 billion while the trade deficit stood at $62.44 billion, compared to $59.69 billion last year.

Exports in 2012-13 fell 1.6 per cent, to $300.6 billion, as a slowdown in the global economy reduced demand, while imports increased by a marginal 0.44 per cent to $491.48 billion from $489.31 billion.