India’s merchandise exports in February plunged 15 percent from a year earlier to $21.5 billion, following an 11.2 percent decrease in January, marking the lowest value in three years, according to provisional figures released by the Ministry of Commerce and Industry.
Imports fell even more steeply, contracting 15.7 percent from February 2014 to $28.4 billion. As a result, India’s monthly trade imbalance with the rest of the world narrowed to a 17-month low, at $6.9 billion.
“The continuous double digit decline in exports both in January and February makes us apprehensive about reaching even $320 billion in exports in fiscal year 2014-15,” said Rafeeque Ahmed, president of the Federation of Indian Export Organizations, in a statement.
“Indian exporters are losing out particularly to China, which has fixed exchange rate against euro and other currencies, while Indian rupee is fast fluctuating except against the U.S. dollar. This partly explains a 48 percent growth in China’s exports in February.”
From April through February, India’s overall exports totaled $286.6 billion, improving slightly from $284 billion for the same period in the previous fiscal year. Imports for the 11-month period amounted to $412 billion, up from $409 billion, with cumulative trade deficit remaining nearly flat year-over-year, at $125.4 billion.
With just a month left for the current fiscal year, which runs from April to March, and slowing growth trends, New Delhi’s annual export target of $340 billion looks well out of reach.
“Even though trade deficit has shrunk, double-digit decline in exports for the past two consecutive months is a cause of worry. It is an indication that we would not be able to achieve this year’s export target,” said Arbind Prasad, director general of the Federation of Indian Chambers of Commerce and Industry.
FIEO expects the federal government to announce major incentives in the new five-year foreign trade policy to be released shortly, to rejuvenate the export sector. “This will go a long way in reversing the declining trend in our exports.”