The United States and Europe account for about 35% of India’s total exports. Impacted by the global slowdown, the Asian country’s exports declined by 12.1% in October – the first decline in seven years caused by weak demand from the advanced economies. Sources said the government was likely to come out with industry-specific measures to boost exports and limit job losses.

Exports in October fell to $12.82 billion from $14.59 billion in 2007, with tight credit conditions adding to the problem of weak demand. Imports were up 10.6% to $23.36 billion, pushing trade deficit higher by over 61% to $10.53 billion.

“The the fall in exports in October is an aberration which will correct in subsequent months. But the export target of $200 billion won’t be met this year,” said D.K. Joshi, principal economist with Crisil.

Exports during April to October were up 23.7% to $107.8 billion. During this period, trade deficit stood at $73 billion against $45.64 billion a year ago.

“The (export) target will not be achieved. The grim situation will continue, especially in sectors such as handicrafts, textiles, carpets, marine products, leather and agri products,” said Ajay Sahai, director-general of Fieo.

D.H. Pai Panandiker, president of the RPG Foundation, said overseas buyers would avoid India for some time because of the Mumbai attacks. “Exports are unlikely to pick up fast until the recession in the US and Europe reverses. A fiscal package from the government for exporters looks imminent,” he said.

Sonal Varma, economist with Nomura, said the demand from developed countries had slackened and the trend was likely to persist in 2009. “We expect year-on-year export growth to remain negative until mid-2009,” she said.

Amit Mitra, secretary- general of Ficci, said, “Unless the government comes out with a complete package immediately we may see a further fall in exports in the current year.”

Sources said the government was likely to offer interest relief to exporters. Leather, textile, gems and jewellery may get more rate relief. Relief on the duty drawback scheme and easy access to long-term credit are also on the cards. Insurance companies offering cover to consignments to risky regions may get incentives.

The government will also take steps to promote exports to West Asia and Africa, which have been less affected by the global financial crisis. — Calcutta Telegraph