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[NEW DELHI] India's merchandise exports fell for the 13th successive month in December, as orders from the United States and Europe shrank and exporters grappled with a competitively weaker Chinese yuan.
The deteriorating global economic growth outlook and rising volatility in currency markets have dampened Indian exports, although the blow has been softened by a collapse in the country's oil import bill. "We are facing terrible times as orders from the US and Europe have dried up," said SC Ralhan, president of the Federation of Indian Export Organisations (FIEO), referring to shipments to India's two largest markets. "The slowdown in China and depreciation of its currency have further hit exports," he said, adding that total merchandise exports could fall to about $250 billion in the fiscal year ending on March 31.
Exports in December fell 14.75 per cent from a year earlier to US$22.3 billion while imports stood at 33.96 billion, data from the Ministry of Commerce and Industry showed on Monday.
India's merchandise exports declined 3.5 per cent in 2014/15 to US$310 billion from the previous year while imports were down 0.5 per cent to US$448 billion.
Cheaper Chinese exports have undercut exports of Indian engineering goods, which constitute around a quarter of total merchandise exports.
Engineering exports could fall to near US$60 billion in the current fiscal year from US$72 billion a year earlier, said TS Bhasin, chairman of the Engineering Export Promotion Council. "My own exports are down by more than 30 per cent, forcing me to retrench contract workers and sell in the local market at a lower price," he said, adding more than 100,000 employees in engineering might lose their jobs.
Prime Minister Narendra Modi has made his Make in India programme, which seeks to attract foreign investment in export-oriented manufacturing, a centrepiece of an economic recovery plan that needs to create a million jobs a month to succeed.
India's trade deficit with China widened to US$35.6 billion during the April-Nov period from US$32.4 billion a year earlier. During that period, its exports to China fell to US$6.2 billion from US$7.9 billion a year ago, reflecting a severe imbalance in trade between the world's two most populous countries.
The government offered a fiscal package of about 27 billion rupees (US$400 million) a year, in November to provide subsidised credit to exporters, hoping it could marginally help stabilise exports in coming months.
Finance Minister Arun Jaitley, who will present his annual budget for 2016/17 on Feb. 29, is unlikely to provide much relief to exporters, officials said, as he faces a tough challenge to meet his fiscal deficit targets. "We do not have much hope though exporters' survival is at stake," Mr Ralhan from the FIEO said.