Trade Performance

India’s merchandise exports reached a level US $ 126.3 billion during the year 2006-07 registering a growth of 22.5 per cent over the previous year. The Indian exports have witnessed a sustained high growth rate of more than 20 per cent during the Tenth Plan period. The performance has been very encouraging during the last three years wherein exports grew at an average annual rate of 25.6 per cent in dollar terms. The growth of exports, so far, has been in line with the targets set out in the Foreign Trade Policy 2004-09.

The export growth in India in the recent years is partly on account of a favourable international environment resulting from a sustained growth in average world real GDP by more than 5 per cent and world trade by more than 9 per cent since 2004. This has led to booming trade volumes in the world market. However, this alone does not entirely explain India’s unprecedented export growth. In the recent years, Government has made a conscious and concerted effort to reduce trade barriers, bring down transaction costs and facilitate trade. Exports from India have also responded to these domestic reform measures and policy initiatives.

There has been, however, a deceleration in the growth of exports during the current year i.e. 2007-08. As against a target of US $ 160 billion for the year 2007-08, exports reached a level of US $ 111.1 billion during April–December 2007 registering a growth of 21.8 per cent over the corresponding period of the previous year. Indian rupee has been appreciating against major convertible currencies particularly US dollar since September 2006. Between December 2006 and December 2007, the rupee has appreciated by 13.17 per cent against US dollar. The recent rupee appreciation has been a major source of slow down in the growth of exports particularly of products with low import intensity and high employment content. Quick estimates available for the month of December 2007 show negative export growth for important items such as Ready Made Garments (RMG); Cotton Yarn, Fabric, Made-ups, etc.; Iron Ore; Leather and Leather manufactures, Plastic & Linoleum; Man-made Yarn/fabrics, Marine Products; Carpet; Cashew; Handicrafts etc.

Imports, however, have maintained its tempo registering a growth of 26.0 per cent in US dollar terms to reach a level of US $ 168.9 billion during April-December 2007. Trade deficit during the period was estimated as US $ 57.8 billion. The aggregate foreign trade data in US dollar and rupee terms during 2003-04 to 2006-07 and for April-December 2007 are given in Table 2.1.

TABLE-2.1 India’s Foreign Trade

(P) Provisional data.
Source: DGCI&S, Kolkata.

Exports by Principal Commodities

India’s Exports for April-October 2007, in terms of principal commodity groups, compared with the corresponding period of 2006 are given in Table 2.2. According to disaggregated data of exports by Principal Commodities available for the period April – October 2007, the export growth was mainly driven by Agriculture & Allied Products, Petroleum Products, Gems & Jewellery, Engineering Goods. The share of Principal Commodities in India’s total exports during April-October 2007 is given at Chart 2.1 below:

Except for Gems & Jewellery Sector, all other four leading commodity groups have witnessed deceleration in growth of exports during the first seven months of the current year (April-October 2007-08), both in rupee as well as dollar terms. The export performance during April-October 2007-08 vis-a-vis the corresponding period of the previous year are shown at Chart 2.2 and 2.3 below:

Chart 2.1

Chart 2.2

Chart 2.3

Plantation Crops

Export of plantation crops during April-October 2007 declined by 16.08 per cent in rupee terms compared with the corresponding period of the previous year. Export of Coffee registered a negative growth of 18.83 per cent, the value declining from Rs. 1,200.95 crore to Rs. 974.75 crore. Export of Tea also declined by 13.45 per cent.

Agriculture and Allied Products

Agriculture and Allied Products as a group include Cereals, Pulses, Tobacco, Spices, Nuts and Seeds, Oil Meals, Guargum Meals, Castor Oil, Shellac, Sugar & Molasses, Processed Food, Meat & Meat Products, etc. During April-October 2007, exports of commodities under this group registered an average growth of 17.87 per cent with the value of exports rising from Rs. 21,035.21 crore in the previous year to Rs. 24,794.73 crore during the current year.

Ores and Minerals

Exports of Ores and Minerals were estimated at Rs. 16,667.07 crore during April-October 2007 registering a growth of 6.14 per cent over the same period of the previous year. Sub groups viz. Processed Minerals, and Coal have recorded negative growth of, 18.3 per cent and 22.73 per cent respectively. Mica, Other Ores & Minerals and Iron Ore have registered a positive growth of 1.46 per cent, 10.67 per cent and 15.13 per cent respectively.

Leather and Leather Manufactures

Export of Leather and Leather Manufactures recorded a negative growth of 2.89 per cent during April-October 2007. The value of exports decreased to Rs. 7,658.83 crore from Rs. 7,886.92 crore during the same period of the previous year. Exports of Leather and Manufactures have registered a negative growth of 10.48 per cent whereas Leather Footwear registered a growth of 8.37 per cent.

Gems and Jewellery

The export of Gems and Jewellery during April-October 2007 increased to Rs. 46,886.76 crore from Rs. 42,458.83 crore during the corresponding period of last year showing a growth of 10.43 per cent.

Chemicals and Related Products

During the period April-October 2007, the value of exports of Chemicals and Allied Products increased to Rs. 47,037.75 crore from Rs. 47,030.10 crore during the same period of the previous year registering a marginal growth of 0.02 per cent. Rubber, Glass & Other Products; Residual Chemicals & Allied Products and Basic Chemicals, Pharmaceuticals & Cosmetics have registered a positive growth, whereas Plastic & Linoleum registered a negative growth.

Engineering Goods

Items under this group consist of Machinery, Iron & Steel and Other Engineering items. Export from this sector during the period April-October 2007 stood at Rs. 72,519.46 crore compared with Rs. 66,679.50 crore during the same period of the previous year, registering an overall growth of 8.76 per cent.

Electronic Goods & Computer Software in Physical Form

During the period April-October 2007, exports of Electronic Goods as a group were estimated at Rs. 7,529.09 crore compared with Rs. 7,469.53 crore during the corresponding period of last year, registering a marginal growth of 0.80 per cent. Computer Software in Physical form has shown a significant positive growth of 119.20 per cent but the exports of electronics registered a negative growth of 1.02 per cent.

Textiles

During the period April-October 2007, the value of Textiles exports was estimated at Rs. 39,365.34 crore compared with Rs. 42,817.07 crore in the corresponding period of the previous year, recording a negative growth of 8.06 per cent. The export of Readymade Garments; Cotton, Yarn, Fabrics, Made Ups, etc.; Natural Silk Textiles; Wool & Woolen Manufactures; and Jute Manufactures recorded a negative growth of 13.0 per cent, 7.8 per cent, 24.04 per cent, 13.9 per cent, and 9.96 per cent respectively. Manmade Textiles & Made Ups and Coir & Coir Manufactures have shown a positive growth of 12.86 per cent and 1.69 per cent respectively.

Handicrafts and Carpets

Export items of Handicrafts include Metal Artware, Textiles (hand printed), Woodwares and Zari goods. Exports of Handicrafts declined to Rs. 951.90 crore from Rs. 1,263.63 crore during the corresponding period of the previous year registering a negative growth of 24.67 per cent. Export of carpets decreased to Rs. 1,974.13 crore from Rs. 2,422.29 crore during the same period last year registering a negative growth of 18.50 per cent.

Project Goods

During April – October 2007, the export of Project Goods were estimated at Rs. 93.61 crore compared with Rs. 198.88 crore during the corresponding period of last year registering a negative growth of 52.93 per cent.

Petroleum Products

Export of Petroleum Products increased to Rs. 61,808.75 crore during April-October 2007 as compared with Rs. 52,583.31 crore during the same period of last year recording a growth of 17.54 per cent. As a result of this, the share of Petroleum Products in total exports increased to 17.64 per cent.

Cotton Raw including Waste

There was a negative growth of Cotton Raw including waste from Rs 1,707.82 crore in April-October 2006 to Rs. 1,122.91 crore during April-October 2007. The rate of negative growth of exports of this item was at 34.25 per cent.

Imports by Principal Commodities

India’s imports for April-October 2007 in terms of principal commodities compared with the corresponding period of 2006 are given in Table 2.3. According to disaggregated data of imports by Principal Commodities available for the period April – October 2007, the import growth was driven by commodities such as Iron & Steel, Fertilizers, Transport Equipments, Machineries, Machine tools, Artificial Resins, Plastic Material, Gold, Non-ferrous Metals, Electronic Goods etc. Petroleum Crude and Metalliferrous Ores registered a low but positive growth. The share of imports by Principal Commodities during April – October 2007 is depicted in Chart 2.4 below:

The import performance by Principal commodities during April-October 2007-08 vis-a-vis the corresponding period of the previous year are shown at Chart 2.5 and 2.6 below:

Chart 2.4

Chart 2.5

Chart 2.6

Fertilizers

During April-October 2007, import of Fertilizers increased to Rs. 11,963.61 crore from Rs. 8,701.98 crore in April-October 2006, recording a growth of 37.48 per cent.

Petroleum Crude & Products

The import of Petroleum Crude & Products stood at Rs. 167,026.26 crore during April- October 2007 against Rs. 161,117.10 crore during the same period of the previous year registering a modest growth of 3.67 per cent.

Pearls, Precious and Semi-Precious Stones

Import of Pearls and Precious and Semi-Precious Stones during April-October, 2007 increased to Rs. 22,351.67 crore from Rs. 19,509.57 crore during the corresponding period of the previous year registering a growth of 14.57 per cent.

Capital Goods

Import of Capital Goods, largely comprising Machinery, including Transport Equipment and Electrical Machinery recorded a notable increase during April- October, 2007 over the same period of last year. Import of Machine Tools, Non-Electrical Machinery, Electrical Machinery and Transport Equipment registered a growth of 25.71 per cent, 18.33 per cent, 28.05 per cent, and 35.11 per cent respectively. Growth of machine tools and Transport Equipment are good signs – increasing production capabilities.

Organic and Inorganic Chemicals

During April- October 2007, import of Organic and Inorganic Chemicals increased to Rs. 22,889.23 crore from Rs. 20,840.56 crore during the same period of last year, registering a growth of 9.83 per cent. Import of Medicinal and Pharmaceutical Products also increased to Rs. 3,914.15 crore from Rs. 3,039.38 crore during the corresponding period of last year registering a growth of 28.78 per cent.

Direction of India’s Foreign Trade

The value of India’s exports to and imports from major regions/ countries are given in Table 2.4 & 2.5. Share of major destinations of India’s Exports

Chart 2.7

and Imports during April-October 2007 are given in Chart 2.7 and 2.8 respectively.

During the April-October of the current year, the share of Asia and ASEAN region comprising South Asian, East Asian, Mid-Eastern and Gulf countries accounted for nearly 50 per cent of India’s total exports. The share of Europe and America in India’s exports stood at 22.70 per cent and 18.15 per cent respectively of which EU (27) comprises 21.40 per cent. During the period, USA continued to remain the most important country of export destination (13.84 per cent) followed by United Arab Emirates (10.28 per cent), China 5.32 per cent), Singapore (4.41 per cent), UK (4.24 per cent), Hong Kong (4.09 per cent), and Germany (3.11 per cent).

Asia and ASEAN accounted for 61.24 per cent of India’s total imports during the period followed by Europe (20.94 per cent) and America (9.27 per cent). Among individual countries the share of China stood highest at (11.53 per cent) followed by Saudi Arabia (7.28 per cent), USA (5.90 per cent), and UAE (5.48 per cent).

During the same period, Africa accounted for the highest growth in India’s export at 19.15 per cent

Chart 2.8

followed by Europe (10.13 per cent) and Asia & ASEAN (8.34 per cent). On the other hand, India’s imports from the Europe region were 18.97 per cent higher than the imports in the corresponding period of the previous year.

Import of Sensitive Items during April-December 2007

The total import of sensitive items for the period April-December 2007 was Rs 20,589 crore as compared to Rs 18,532 crore during the corresponding period of last year thereby showing an increase of 11.1%. The gross import of all commodities during same period of current year was Rs 6,82,088 crore as compared to Rs 6,11,522 crore during the same period of last year. Thus import of sensitive items constitutes 3.0% of the gross imports during last year as well as current year.

Imports of spices, marble & Granite and milk & milk products have shown a decline at broad group level during the period. Imports of items viz. edible oil, fruits & vegetables (including nuts), food grains, cotton & silk, automobiles, products of SSI, rubber, Alcoholic beverages and Tea & Coffee have shown increase during the period under reference.

In the edible oil segment, the import has increased from Rs 7929 crore last year to Rs 8433 crore for the corresponding period of this year. The imports of both crude oil as well as refined oil have gone up by 5.6% and 13.1% respectively. The increase in edible oil import is mainly due to significant growth in import of crude palm oil and its fractions, which has gone up by 11%.

Imports of sensitive items from Indonesia, Canada, China P RP, United States of America, Russia, Brazil, Sri Lanka DSR, Germany, Thailand, Japan, Guinea Bissau, Ukraine etc. have gone up while those from Argentina, Myanmar, Malaysia, Cote D’ Ivoire, Australia etc. have shown a decrease.

Table 2.1

Summary of Import of Sensitive Items (Provisional Estimates)