After four months of growth, exports entered the negative zone again, logging in a marginal contraction of 1.1 percent in May and leading to a trade deficit of $20.1 billion, highest in the last seven months, thanks to a near-doubling of gold imports. The decline in shipments, according to commerce secretary SR Rao is mainly due to the steps taken by the government to suspend gold trading in special economic zones (SEZs). Gold exports from SEZs in May declined by $800 million.
Besides problems in gold, weakness in the European markets has also impacted exports growth. Exports in May stood at $24.51 billion compared to $24.78 billion in the same month of 2012, whiel imports in May grew by 6.99 percent to $44.65 billion.
"As far as trade deficit is concerned, it is very worrisome.It is largely contributed by heavy imports of gold and silver," Rao said.Gold and silver imports, during the month under review, grew by 89 percent to $8.39 billion. During April-May period, it grew by 109 percent to $15.88 billion.However, exports during the first two months of the fiscal grew 0.21 percent to $48.67 billion. Imports during the period was up 8.88 percent to $86.6 billion.
"Exports in May, there has been a negative growth which is largely contributed because government in the beginning of May has put restrictions on gold trading in SEZs," he said.Oil and non-oil imports in May grew by 3 percent and 9.1 per cent to $15 billion and $29.62 billion respectively. He said hopefully from June, exports will bounce back as gold trading activities have started again in SEZs. "We have now made it mandatory that even in SEZ, gold units shall comply with the DGFT notification of minimum value addition of 3 per cent in gold jewellery and 5 percent in gold and precious stone studded jewellery," Rao said.
Prior to May 1, the value addition norm were not applicable for SEZ exports and now this has to be adhered to. The biggest trade gap of $21 billion was recorded last October.
