India’s merchandise exports grew in July at the slowest pace in six months as demand for the nation’s textiles, tea and rice weakened in the U.S. and Europe.
Overseas shipments rose 13.2 percent from a year earlier to $16.24 billion after a 30.4 percent gain in June, Rahul Khullar, the top bureaucrat in the commerce ministry, told reporters in New Delhi today. Imports grew 34.3 percent to $29.17 billion.
Indian exports may weaken in the coming months as the global economic recovery flounders, Khullar said, undermining the nation’s economic growth. Merchandise exports account for about a fifth of the nation’s $1.3 trillion economy.
“Given the slowdown in the U.S. and Europe, conditions are not conducive to sustain high export growth rates,” said Dharmakirti Joshi, chief economist at Mumbai-based Crisil Ltd., the Indian unit of Standard & Poor’s.
Prime Minister Manmohan Singh’s government is aiming to accelerate India’s growth to 8.5 percent in the current fiscal year ending March 31, from 7.4 percent in the previous year.
Exports slowed in July as overseas demand slackened for the nation’s leather, electronic goods, readymade garments, tea and rice, Commerce Secretary Khullar said.
The U.S. economy grew at a slower-than-estimated 2.4 percent annual pace last quarter. In Germany, investor confidence dropped to a 16-month low in August.
Khullar said India’s exports will “take a hit” as demand wanes in developed countries.
Exports expanded 30.1 percent to $68.6 billion in the four months through July, while imports jumped 33.3 percent to $112.2 billion during the period, widening the trade deficit.
Khullar expects India’s exports to grow about 15 percent in the remaining months of the current financial year. Exports may touch $200 billion by March 31, he said.