The Eurozone crisis has begun biting Indian exports which grew year-on-year by 10.8 per cent to $19.9 billion in October, the lowest in the last two years, according to preliminary data released today.
Being pushed by expensive crude oils and vegetable oils, imports grew at a faster rate of 21.7 per cent to $39.5 billion leaving a trade deficit of $19.6 billion - the highest ever in any month in the last four years.
From a peak of 82 per cent in July, export growth has been slipping to 44.25 per cent in August, 36.36 per cent in September and 10.8 per cent in October.
"In any sector, it is the lowest in the last three months, deceleration is uniform," Commerce Secretary Rahul Khullar told reporters here.
But, for the cumulative April-October period, exports aggregated to $179.8 billion showing a handsome growth of 46 per cent, thanks to sterling trend witnessed in the previous months of the current fiscal.
"The picture is not going to be rosy for the next six months," he said.
Steady rise of 31 per cent in imports for the seven-month period to $273.5 billion has left trade gap widening to $93.7 billion.
"Balance of Trade is something to be very worried about because at this rate, it is going to breach $150 billion mark (for 2011-12)," Khullar said.
The sectors which depend heavily on the European markets have been hit hard. The electronic goods, bunch of which goes to Europe, have shown a deceleration of 18 per cent in October. "Clearly, that is where the growth has contracted ...effect of what is happening there".
The export growth has been the lowest since October 2009 when it contracted by 6.6 per cent.
During October, several exporting sectors registered a decline in growth. Engineering and petroleum exports grew by only 2.6 per cent and 9.4 per cent to $4.4 billion and $9.4 billion, respectively.
Khullar said: "Clearly you are having difficult autumn."
Echoing his views, Director General of the Federation of Indian Export Organisation (FIEO) Ajay Sahai said: "We are now getting to a tough situation...the dip (in growth) is quite sharp. We feel the challenge in Eurozone will bring difficult times."
However, for April-October period picture looks better. Engineering grew by 89.6 per cent, petroleum- 51 per cent, gems and jewellery- 31 per cent, electronics- 50 per cent, drugs and pharmaceuticals- 32 per cent and ready-made garments by 31 per cent.
During the period, imports expanded by 31 per cent. Under the influence of rising crude oil prices imports went up by 41 per cent to $81.9 billion.
Other sectors which registered high import growth include gold and silver- 64 per cent, electronics- 22 per cent, chemicals- 23.8 per cent, coal- 51 per cent, fertiliser- 2.5 per cent and vegetable oil- 59 per cent.