Will government`s new incentives rekindle exports?
CRISIL Research has come out with its analytical note based on trade data of March 2013. According to the research firm, the recent plunge in the gold prices is expected to reduce the non-oil import bill in the coming months.
April 22, 2013 / 13:35 IST
CRISIL Research has come out with its analytical note based on trade data of March 2013. According to the research firm, the recent plunge in the gold prices is expected to reduce the non-oil import bill in the coming months.
Exports during FY 2012-13, stood at USD 301 billion missing the Government target of USD 360 billion by a wide margin. For the year, exports contracted by 1.8 per cent on a y-o-y basis. In contrast, last fiscal, exports exceeded the government target of USD 300 billion by approximately USD 6 billion. Imports, during FY 2012-13 grew by 0.4 per cent and stood at USD 492 billion. As a result, trade deficit for FY 2012-13 widened by 4.1 per cent from FY12 to USD 191 billion in FY 13. The increase in trade deficit reflects a wider structural weakness in the economy - high import demand combined with a loss of export competitiveness. India’s export competitiveness is on a decline due to structural issues like high raw materials cost, lower labour productivity, infrastructural bottlenecks, difficulty in land acquisition, higher inflation differential between India and major trading partners etc.Although prolonged economic slowdown in key export destinations has been affecting India’s exports, it has gained momentum recently on a seasonally adjusted m-o-m basis. Exports in March 2013 grew by 7.0 per cent on y-o-y basis. Imports on the other hand, contracted by 2.9 per cent. Oil imports in March were 16.6 per cent lower than the previous year. Lower crude oil prices were primarily the reason for lower oil import bill. Non-oil imports for FY 2012-13 grew by 5.4 per cent over the previous year. However, the recent plunge in the gold prices is expected to reduce the non-oil import bill in the coming months.View: CRISIL expects merchandise exports to recover further in 2013 due to relative improvement in the global economic outlook and government’s efforts to support exports. The new trade policy released today has announced steps like greater market and product diversification, extension of Zero Duty Export Promotion Capital Goods (EPCG) Scheme to all sectors, to revive exports. These may boost exports growth in the short run but for export growth to remain strong over the medium to long term free from effect of business cycles in the trading countries improving export competitiveness by addressing structural issues would be crucial.Disclaimer: CRISIL Limited has taken due care and caution in preparing this Report. Information has been obtained by CRISIL from sources, which it considers reliable. However, CRISIL does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. CRISIL Limited has no financial liability whatsoever to the subscribers / users / transmitters / distributors of this Report. The Centre for Economic Research, CRISIL (C-CER) operates independently of and does not have access to information obtained by CRISIL's Ratings Division, which may in its regular operations obtain information of a confidential nature that is not available to C-CER. No part of this Report may be published / reproduced in any form without CRISIL's prior written approval. Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
