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Thursday, May 01, 2008

Indian Exports March 2008

India's exports slowed in March, missing the annual target for overseas sales, as a stronger rupee and weakening global growth hurt shipments of clothes, steel and other goods. March shipments were up 26.6 percent to $16.3 billion over March 2007, slower than the 35.3 percent gain in February. Exports in the fiscal year ended March 31 rose 23 percent to $155.5 billion over the previous year, short of a government target of $160 billion.

It looks like it may well be difficult for India to achieve this years export target of $200 billion, especially since the government has already banned shipments of some food products and other commodities in an attempt to contain prices. The US slowdown - the United States is India's biggest market - also threatens overseas sales.

India's imports in March rose 35.2 percent to $23.2 billion, widening the trade deficit to $6.9 billion from $4.3 billion a year earlier. Oil imports in March rose 77 percent to $8.63 billion, while non-oil imports gained 19 percent to $14.5 billion. Imports in the year to March 31, 2008, rose 27 percent to $236 billion, widening the trade deficit in the fiscal year to $80.4 billion.

Exports to the U.S. were up 9.8 percent in the eight months to Nov. 30, slower than the 12.8 percent gain in the same period a year earlier, according to the latest breakdown of exports released by the central bank.

Shipments to Europe rose 28.3 percent in the eight-month period from 16.4 percent in the year earlier, the central bank said. Shipments to the U.K. rose 24 percent and sales to the Netherlands jumped 102 percent.

Overseas sales are likely to slow this year as the government last month banned shipments of cement, rice and pulses and imposed an export tax on the overseas sale of some steel products to help contain inflation, currently holding near a three-year high.

The rupee gained 12 percent in 2007, the most in more than three decades, making the manufactured exports that make up about 15 percent of India's economy more expensive. The rate of currency increase has slowed somewhat in 2008, although the rupee is still up 2.5 percent so far this year.

India's economic growth is expected to drop back to between 8 percent and 8.5 percent this fiscal year, compared with an estimated 8.7 percent gain last year, the Reserve Bank of India said on April 29. The central bank has raised borrowing costs since October 2004 to damp inflation. The central bank on April 29 raised the so-called cash reserve ratio for the second time in two weeks, to 8.25 percent from 8 percent, to add to the government's efforts aimed at containing inflation.

Trade Minister Kamal Nath announced on April 11 that the government plans to focus on promoting exports to 10 countries including Mongolia, Bosnia- Herzegovina, Albania, Macedonia, Croatia, Honduras, Djibouti, Sudan, Ghana and Colombia.

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