India's Export Growth in April

By Kartik Goyal

June 2 (Bloomberg) -- India's export growth accelerated in April as companies shipped more gems, jewelry, oil and other manufactured products to overseas markets.

Shipments jumped 31.5 percent to $14.4 billion from a year earlier, faster than March's 26.6 percent gain, the government said in a statement in New Delhi today. Imports in April rose 36.6 percent to $24.3 billion, widening the trade deficit to an all-time high of $9.87 billion.

Overseas sales have risen as companies boost shipments to Europe, Japan and other developing Asian nations to counter slowing demand from the U.S., India's biggest export market. Increased sales abroad may help sustain growth in Asia's third- largest economy as inflation at a 3 1/2-year high crimps domestic spending.

Indian exports ``are being buttressed by strong demand from emerging markets and oil-producing countries, helping offset slackening demand from OECD countries,'' said Sonal Varma, a Mumbai-based economist at Lehman Brothers Inc. ``A weaker currency also bodes well for India's low-cost, labor-intensive exports, notably textiles and leather.''

Exports to the U.S. rose 9.3 percent in the nine months to Dec. 31, slower than the 10.6 percent gain in the same period a year earlier, according to the latest breakdown of overseas sales released by the central bank. India gives a more detailed analysis of exports five months after releasing initial data.

Shipments to Europe rose 25.5 percent in the nine-month period, from 16.2 percent in the year earlier, the central bank said. Exports to Germany gained 29.3 percent and sales to the Netherlands jumped 91 percent.

Weaker Currency

``I am confident that we will be able to sustain the growth process and overcome the challenges we face on account of the global slowdown,'' Prime Minister Manmohan Singh said today, addressing a grouping of industries in New Delhi today.

A weaker rupee is good for Indian exporters, Trade Minister Kamal Nath said last week. The rupee has declined 7.16 percent this year, making it the second-worst performer among Asia's 10 most-traded currencies excluding the yen.

``The deterioration in the external position has been an important reason why the rupee has softened a bit more than the currencies of several of its Asian partners over recent months,'' said Robert Prior-Wandesforde, a senior economist at HSBC Holdings Plc in Singapore.

Trade Deficit

The trade deficit may widen to 9 percent of the gross domestic product in the fiscal year to March 2009 and the current account deficit to 2.8 percent, Prior-Wandesforde said.

To help boost overseas sales, the government plans to focus on promoting exports to 10 countries including Mongolia, Bosnia- Herzegovina, Albania, Macedonia, Croatia, Honduras, Djibouti, Sudan, Ghana and Colombia, Nath said on April 11.

Nath has set a target of more than tripling India's share of world trade to 5 percent by the year 2020 from the current 1.5 percent.

India's oil imports in April rose 46.2 percent to $8.03 billion as Indian refiners paid more for import of crude oil imports. India relies on imports of overseas crude oil to meet its three-quarters of its energy needs. Non-oil imports gained 32.3 percent to $16.2 billion.

``The unrelenting rise in crude oil prices threatens to disrupt the development process in a large number of oil importing developing countries,'' Singh said today.

Source: Bloomberg.com