Indian export rises in May 2010 but Commerce Ministry remains cautious about growth

India observed a sound growth in export in May 2010 as demand in West goes up. The country registered an export income of $16.1 billion in May 2010 which is a 35.1% growth on a year-over-year basis. However, Commerce Ministry is not so happy over the rise.

According to Commerce Secretary Rahul Khullar, there is no reason to celebrate as the rise in export is “driven by the base effect.” In May 2008, the export income was 18.5 billion.

On the contrary, imports rose to $27.4 billion in May, a 30.8% rise on a year-over-year basis causing to widen the country’s trade deficit to $11.3 billion.

Fall of Euro affected Indian exporters badly. Of the $176 billion export last fiscal year, European market accounted for 23 percent. Mr. Khullar said that the European debt crisis caused a sharp depreciation making the European goods more competitive and Indian goods more expensive. Since December 2009, Euro depreciated by about 18% against the the Indian Rupee.

A.Sakthivel, President, Federation of Indian Export also agreed with Mr. Khullar and expressed his concerns over the spread of the Greece crisis in other countries of the region.

In the current fiscal year, India is targeting a 15% growth in export.

In April-May period of 2010 the country, Indian exports stood at $33 billion which is a 35.7% increase on a year-over-year basis. The export figure was driven by the demand in iron ore export which more—than-doubled compared to last year coupled with increasing oil export due to increasing refining capacity of the country.