Aug. 1 (Bloomberg) -- India's export growth accelerated in June as companies shipped more gems, oil and other manufactured products to overseas markets.

Shipments, which account for about 15 percent of the economy, rose 23.5 percent to $14.66 billion from a year earlier, after gaining 13 percent in May, the government said in a statement in New Delhi today. Imports increased 26 percent to $24.45 billion, widening the trade deficit to $9.78 billion.

Overseas sales are rising as companies boost shipments to Europe, Japan and other developing Asian countries to counter slowing demand from the U.S., India's biggest export market. Still, shipments may weaken later this year as soaring inflation and flagging growth crimps spending by customers abroad.

``Selling goods in new markets and diversifying products portfolio is helping cushion the downslide in exports,'' said Shubhada M. Rao, chief economist at Yes Bank Ltd. in Mumbai. A ``global slowdown'' will likely hurt sales of Indian goods overseas later this year, she said.

Weaker growth in the U.S., Asia's biggest market, is crimping exports from the region. Japan's overseas sales fell for the first time in four years in June and shipments from China grew 17.6 percent, slower than May's 28.1 percent.

Talks Collapse

Efforts to increase global trade suffered a setback this week after a nine-day summit at the World Trade Organization ended in Geneva without an agreement to cut agriculture subsidies and tariffs on industrial goods. Talks collapsed on July 29 after India and the U.S. disagreed over how poor countries could raise duties to protect their economies from surging farm imports.

``I am disappointed because we came so close to running the last mile,'' India's Trade Minister Kamal Nath told reporters today in New Delhi. ``We should continue with the engagement and I hope talks will resume soon.''

The share of the U.S. in India's total exports declined to 13.1 percent in the 11 months to February, compared with 15 percent a year earlier, according to the latest breakdown of overseas sales from the central bank. India gives a more detailed analysis of exports five months after the initial data.

Indian exporters are benefiting from a weaker rupee, said Sonal Varma, a Mumbai-based economist at Lehman Brothers Inc. The rupee has declined 7.3 percent this year as crude oil advanced 27 percent, reaching a record $147.27 per barrel on July 11. A weaker rupee adds to the value of exports, helping companies' earnings.

Trade Target

Exports in the three months ended June 30 rose 22.3 percent from a year ago to $42.8 billion, today's report showed. Imports in the quarter rose 29.7 percent to $73.3 billion, resulting in a trade deficit of $30.4 billion, compared with $56.5 billion in the same period a year earlier.

Trade Minister Nath has set a target of more than tripling India's share of world trade to 5 percent by the year 2020 from the current 1.5 percent. India is targeting exports of $200 billion in the current fiscal year that started April 1, 28 percent more than $155.5 billion in the previous year.

India's oil imports in June rose 53.4 percent to $9.03 billion as refiners paid more for crude oil purchased overseas. India relies on imports of oil for three-quarters of its energy needs. Non-oil imports gained 14 percent to $15.4 billion.

To contact the reporter on this story: Kartik Goyal in New Delhi at kgoyal@bloomberg.net.

Last Updated: August 1, 2008 05:04 EDT