New Delhi, Aug. 12: Exports rose 11.64 per cent in July to $25.83 billion on the back of signs of a global trade recovery, bringing some relief to a government seized by slowing growth and a falling rupee.
Imports fell 6.2 per cent to $38.1 billion during the month as the falling value of the rupee made imports costlier, leading to a fall in demand. Trade deficit stood at $12.27 billion. The deficit during the April-July period was $62.44 billion compared with $59.69 billion in the same period last year.
The commerce ministry said exporters were yet to see the full benefit of the weaker currency on foreign sales.
“A stable exchange rate helps exports. Volatility does not permit exporters to get full value from the depreciation,” commerce secretary S.R. Rao said.
The import compression was mainly on account of a sharp decline in bullion imports to $2.97 billion in July compared with $4.47 billion in the year-ago period.
The Reserve Bank of India and the government had taken a series of measures, including increasing import duties, to curb the huge demand for gold in the country.
Oil imports during July were 8 per cent lower at $13.82 billion, while non-oil imports at $25.39 billion, were 5.26 per cent lower than the same month last year.
“Double-digit growth in exports coupled with positive signs emanating from the US and the EU reassure me of continuance of the trend in the months to come,” M. Rafeeque Ahmed, president of the Federation of Indian Export Organisations (Fieo), said.
In a research note, Nomura Financial Advisory and Securities said, “The sharp pick-up in exports suggests that global demand is recovering.”
Nomura expects “the current account deficit to moderate to 4 per cent of GDP (gross domestic product) in financial year 2014 from 4.8 per cent last year because of lower gold imports and lower non-oil and non-gold imports”.
“However, we expect net capital inflows to also slow because of worsening domestic growth prospects, which will result in a balance of payments deficit,” Nomura said.