India falls short of its export target; deficit under check

India recorded $310.5 billion worth of exports in FY15, down 1.2 per cent from $314.4 billion last year and 7.5 per cent below the government's target of $340 billion. Exports had grown by 4.7 per cent in FY14. Despite depreciation in rupee from 60.5 in FY14 to 61.1 in FY15, exports declined amidst weak global growth.

Even after accounting for 11.2 per cent decline in oil exports (from $63.1 to $56.1 billion) due to lower oil prices in FY15, growth in non-oil exports was a paltry 1.2 per cent (from $251.3 to $254.3 billion). A positive development - engineering goods export increased 14.2 per cent (from $63.9 to $73.0 billion) in FY15.

Imports too declined in FY15, albeit marginally. They were down 0.59 per cent to $447.5 billion from $450.2 billion in FY14.

A 16.2 per cent decline in oil import in FY15 (from $165.0 to $138.3 billion) helped assuage the impact higher gold imports which grew 19.2 per cent (from $28.8 to $34.3 billion).

Non-oil, non-gold imports grew by a decent 7.2 per cent in FY15 (from $256.4 to $274.9 billion) suggesting improvement in domestic demand conditions. Key items which registered a high import growth were: ''electronic goods'', growing by 14.8 per cent (from $32.4 to $37.2 billion) and ''machinery'' growing by 4.9 per cent (from $27.1 to $28.5 billion).

Decline in imports allowed merchandise trade deficit to rise only marginally to $137.0 billion in FY15 as against $135.8 billion in FY14.

Services trade surplus during Apr-Feb FY15 improved to $68.3 billion from $66.6 billion in the year ago period suggesting that current account deficit would be kept under check. We estimate the CAD for FY15 at 1.1 per cent.