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Exports speed up 12% in its fastest pace in 7 months, imports dip 11%

India’s exports grew by a double-digit pace for the first time in seven months in May, narrowing the trade deficit and setting the ground for easing of restrictions on gold imports.Exports last month rose 12.4 per cent to $28 billion from a year earlier, while imports fell 11.4 per cent to $39.23 billion, the Ministry of Commerce & Industry said.

The twin effect led to the trade deficit narrowing to $11.23 billion from $19.37 billion a year earlier. The gap, however, was wider than April’s $10.1 billion and at a 10-month high.According to the Commerce Ministry’s data, gold imports, which had in 2013 led to a widening of the trade deficit and consequently a worsening current account deficit (CAD), fell 72 per cent to $2.19 billion.

'It is definitely an encouraging sign. This is the first time in the last six months that we have recorded a double digit growth. If this trend sustains then I am sure we are reviving...It seems that they (export products) are now acquiring there natural levels, Commerce Secretary Rajeev Kher told reporters here. He said that appreciating rupee was not the factor of the double digit growth in exports.
'There is a positive spirit and if this trend continues the next month then I will definitely be saying that there is a revival (in global demand). So, I would like to see the next month also,' he added.

When asked about the exports target for 2014-15, he said: 'We are working towards something like $1 billion exports on a daily basis'. In the April-May period of this fiscal, exports grew by 8.87 per cent to $53.63 billion. Imports during the period dipped by 13.16 per cent to $74.95 billion, leaving a trade deficit of $21.3 billion.

Before May, the previous high of the trade deficit — $12.2 billion — was 10 months ago in July 2013.Meanwhile, oil imports grew by 2.5 per cent in May to $14.46 billion. For April-May, first two months of the 2014-15 fiscal, the imports rose by 1 per cent to $27.44 billion. Non-oil imports during the second month of the current fiscal dipped by 17.9 per cent to $24.76 billion. In April-May, it declined by 19.7 per cent to $47.51 billion.

Exporting sectors which recorded healthy growth in May include engineering (22.09 per cent), petroleum products (28.7 per cent), ready-made garments (24.94 per cent), pharma (10 per cent) and chemicals (13.8 per cent). Curbs on gold imports have impacted exports of gems and jewellery which registered a marginal growth of 1.36 billion to $3.43 billion in May. Iron ore exports however dipped by 18.95 per cent to $72 million.
On agri exports, in view of a possible deficit in monsoon, Kher said: 'Our approach to agri exports is broadly nuanced by the fact that agri exports as far as possible should be open but clearly they are underlined by the attenuating factors of domestic demand and supply.'
He said the government has reviewed the situation and there is no cause of worry for 'wheat and rice' at present.The government is also watching the situation on a daily basis about the prices of onion, milk and pulses.

'Onion and milk are important. We are very very closely observing the price trend and whenever, if, required, an appropriate action will follow,' he said.

'We are observing the prices (of onion and milk) at whole sale and retail and what is the trend over a week and then follow up will be a decision (if required),' he added. Onions are costlier by Rs 5/kg in retail markets in most cities as compared to the last year prices. The vegetable is selling in the range of Rs 20-25/kg in Delhi. On 9 May, dairy major Amul has increased milk prices in the Delhi-NCR region by Rs 2 a litre. It is also considering raising prices in other parts of the country.
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