Exports growth continues its declining trend in March 2014. After registering a negative growth of 5.5% in February 2014, exports further declined by 3.1% in March 2014. Similarly, imports have also continued to register negative growth. As compared to (-) 17.9% growth recorded in February 2014, imports fell by (-) 2.1% in March 2014.
A decline in exports has led to widening of the trade deficit to a five month high of USD 10.5 billion in March 2014.
Steady decline in imports (on account of curbs on gold imports and slower domestic growth) along with a moderate growth in exports helped in reducing the trade deficit to USD 138.6 billion in FY14 over USD 190 billion in FY13.
A 27% contraction in our trade deficit in FY14 is a positive development; it will further ease the pressure on our current account deficit and considerably reduce the country’s external sector vulnerabilities.
Looking ahead, global growth is expected to improve and the expansion in global output is likely to be led by developed economies, particularly USA. It is expected that growth in export will pick up this year on the back of such recovery though weakness in China and strengthening of Rupee pose some risk. The competitiveness of Indian exporters is eroding owing to recent appreciation in Rupee. Indian exporters also face stiff competition from exports of countries like China, Turkey, Indonesia, Brazil and other emerging economies. The country had targeted the export amount at USD 325 billion for FY14. As against this, the outbound shipment felt short and touched USD 316 billion by end March 2014 as per the press release by the Commerce Ministry. Nevertheless, overall exports registered a growth of 4% over the last financial year
Source: Department of Commerce and Industry and FICCI Research