India’s exports likely to grow twice as fast as expected this year

Indian exporters posted yet another better than expected month in January this year, posting a growth of 32.5%, making January only the second month of $20 billion plus of exports ever. The $20 billion mark was breached in December last year when exports of goods were estimated to be around $22 billion.

In all, Indian exports were 30% higher during the first 10 months of the current financial year that ends in March. The target growth rate was 15%, to touch $200 billion. With two more months to go, exports have already reached a $185 billion, and will reach $225 billion if the last two months also contribute $20 billion each.

Commerce Secretary Rahul Khullar said he expected export target to be breached by at least 10% and the full year number to be north of $220 billion.

On Friday, the government had announced new incentives for exporters worth Rs 500 crore per year, adding to the slew of measures announced since August 2009 by new minister Anand Sharma. Most of the incentives, estimated at Rs 2,000 crore per year, are in the form of duty rebates at the rate of 2 to 5% that can be collected by exporters and sold to importers and others.

Imports rose from $24 billion in December to $28.6 billion during January. The trade shortfall was $8 billion — within the target range of $10 billion per month. The trade deficit is made by India’s surplus in its ‘services’ trade with the rest of the world. India has a 55% share in the world’s IT and BPO exports, netting it around $50 billion a year.

In the financial year so far, the following sectors have done well viz : engineering, up 70% (worth $ 45 billion); gems & jewellery, 9.3% (24.5billion); petroleum & oil products, 36% ($ 30 billion); cotton yarn & made-ups, 52% ($4.7 billion); electronics, 38% ($ 6.4 billion) and plastics & linoleum, 40% (3.7 billion).

In imports, the sectors are Petroleum up 14% ($ 80 billion); pearls & precious stones, 63% ($ 20 billion); gold & silver, 9% ($ 24.5 billion); machinery, 31% (21.7 billion); and iron & steel, 32% ($ 8.9 billion).