The global downturn has taken the wind out of the sails of India's exports, which fell the most in 14 years in April, by 33.2 per cent, over the same month last year, while domestic slowdown led to imports dropping by 36.6 per cent in the same period.
Exports dropped for the seventh month in a row, this time to $10.74 billion, in April 2009-10, from $16.08 billion a year ago.
An over 58 per cent decline in oil import led to a sharp fall in overall imports, resulting in a narrow trade deficit of $5 billion in April, against $8.7 billion a year ago, according to official figures released on Monday.
"Our target is to make sure that at least we have flat growth in exports," Minister of State for Commerce and Industry Jyotiraditya Scindia said after taking charge.
After an impressive growth rate of over 30 per cent in the first six months of the fiscal 2008-09, exports started declining since October.
In 2008-09, exports grew by a meagre 3.4 per cent to $168.7 billion.
". . . this decline would continue till September and we hope that thereafter, we would be able to see a consolidation and improvement in exports," Commerce Secretary G K Pillai said.
Oil imports in April contracted by 58.5 per cent to $3.6 billion, while the non-oil inbound shipments too dropped by 24.6 per cent to $12.1 billion.
Pillai also said that exports in 2009-10 would remain in the range of $170 billion. "(With) the rising oil product prices, the trade deficit for the current fiscal would remain at $100 billion compared to last year's $120 billion," the commerce secretary said.
Meanwhile, the Federation of Indian Export Organisations (FIEO) said inventories with foreign buyers are getting exhausted and exporters have started getting orders.
". . . inventories are getting over and orders are increasing. Demand for low-price articles is increasing but there are still constraints in the middle and high class segments," FIEO director general Ajay Sahai said.
Commenting on India's declining exports, international research firm Moody's said, "An annual contraction in exports is inevitable for India."
It said that the sharp decline in imports has helped to contain the trade deficit.
"Lower global oil prices compared to a year ago has certainly played a role in keeping overall import payments in check," it said adding that however, the slowdown has depressed India's appetite for imports.