The Hindu Business Line : H1 exports up 20 pc; trade deficit widens

THE foreign trade scenario of the country in the first half reflects a mixed bag even as exports continued to show buoyancy. While merchandise exports grew by 20.47 per cent in the first six months of the current fiscal to $43.20 billion ($35.86 billion), the trade deficit zoomed to $20.32 billion against $11.88 billion in the same period last year.

The high oil prices had its impact on the overall imports, which were valued at $63.5 billion during April-September 2005 against $47.75 billion in the same period last year. Oil imports in the first half of the current fiscal grew by 42.87 per cent to $20.83 billion ($14.58 billion in same period last fiscal), according to the provisional data on the first half trade performance released by the Commerce Ministry. Non-oil imports too saw strong growth during April-September 2005 at $42.72 billion, reflecting an increase of 28.79 per cent to the level of $33.17 billion in the same period last year.

Besides high oil prices, trade experts highlighted the existence of inverted duty structure in certain sectors as one of the possible reasons for the surge in imports. "When there is inverted duty structure in a sector, imports are preferred to manufacturing. Apart from the increase in capital goods imports and increased industrial activity, the inverted structure issue could be one of the reasons for the increase in non-oil imports," sources said. For the month of September 2005, merchandise exports stood at $7.3 billion. This was lower than the export performance of $7.4 billion recorded in August 2005. Exports during the month of September 2004 stood at $6.79 billion. Two factors worked against a higher growth in exports.

Ministry officials told Business Line that the July-August torrential rains in Mumbai this year impacted the shipments of cargo, both through air and sea routes. The second factor was the unusual surge in export in September 2004 compared to the September 2003 performance. The high base in September last year appeared to have moderated the increase in exports in September 2005.

Imports during September 2005 stood at $10.49 billion, representing an increase of 17.33 per cent over the level of $8.94 billion in the same month last year. In rupee terms, exports during April-September 2005 increased by 15.48 per cent to Rs 1,88,659 crore. Imports in the first half of the current fiscal increased by 27.48 per cent.

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