Exports grow fastest since Independence

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India's exports surged 37.5% in 2010-11-their fastest annual growth since independence-despite a strong rupee and weak demand in developed markets, data released on Tuesday showed. 

The country shipped goods worth $245.9 billion during the year as attempts to diversify markets and increase regional trade paid off. Exports surpassed the government's initial target of $200 billion. "This is the highest annual percentage growth in exports (in dollar terms)," Commerce Minister Anand Sharma said. 

An emboldened government has set an export target of $450 billion for 2013-14. It will target a 25% rise in exports in the current fiscal. Exports in March added to $29.1 billion, highest for a single month so far. The base effect, however, contributed to a part of the rise. 

Exports had fallen 3.5% in 2009-10 because of the global financial crisis. Robust growth in exports and slower rise in imports helped the government contain trade deficit at $104 billion as against a worrying mid-year estimate of $130 billion. 

New Markets Drive Growth 

Imports rose 21.5% to $350.5 billion in 2010-11. The strong growth was driven by higher exports to new markets in Latin America, Africa and Asia. 

"There was a slump in global demand in 2009 and the initial months of 2010, especially in the traditional markets, and we felt that there was a need to reach out to new destinations," the minister said. The government had announced incentives for shipments to 41 markets, most of which were new trading destinations for the country. Exports to Latin America were up 74% in the first three quarters of 2010-11 compared with the year-ago numbers while those to African countries jumped 50%. 

Exports to the EU and US-traditional markets for Indian merchandise-grew a more modest 22.6% and 26.4%, respectively. "Most of the growth has come from new markets in Latin America, Africa and also Asia, which has now emerged as the main market for India's exports," said Ajay Sahai, director-general of the Federation of Indian Export Organisations . The thrust on new markets is likely to continue in the export strategy to be announced by the commerce ministry later this month, which will aim at increasing the country's exports to $450 billion over the next three years. 

"Countries in Latin America and Africa are the growth poles of the world," said Biswajit Dhar, director-general of Delhi-based think tank Research and Information System for Developing Countries. "It is good that we are managing to get in there as they would be the fastest-expanding markets." Engineering exports rose 85% to $60.5 billion in the year, accounting for onefourth of total exports. Petroleum, oil and lubricant exports also posted an impressive growth of 50.6% to $42.5 billion. 

Other sectors that performed well include gems & jewellery, textiles, electronics, chemicals and drugs & pharmaceuticals. "The shift from low- to high-end exports has also helped the cause," said Shubhada Rao, chief economist with Yes Bank . The growth was despite the rupee remaining reasonably strong through the year. The currency appreciated the most in October 2010, reaching an average exchange price of Rs 44.41 to a dollar. "Exporters have managed to survive when the dollar had fallen to Rs 39. The current situation is not a problem," Sahai said. However, Dhar cautioned against complacency. 

"There is a sense of complacency that we can absorb any amount of hot money, which is not correct," he said. "We have to take steps to check it as the global market is very competitive and to maintain high growth we have to take all possible steps." India's crude oil imports rose 16.7% to $101.7 billion; machinery 19% to $27.2 billion; pearls, gems & jewellery 72.8% to $28.2 billion; and electronics 3.6% to 21.7%. The final import figure could go up by $5-10 billion. 

The actual figure is not yet available due to a software problem. "The current account deficit could be in the neighbourhood of 2.5% to 2.7% (of GDP), but we have to wait for the finance ministry to give us the final figures after taking into account services exports and invisibles," Commerce Secretary Rahul Khullar said.

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