Raising concerns over the widening trade deficit of India, Commerce and industry Minister Anand Sharma cautioned on Friday that Country's exports may not be able to reach even the last year's level of about $306 billion, and the trade deficit is could rise to $196 billion in the current fiscal which may lead to a “crisis'' if the situation does not improve.
“What is very disturbing and challenging is that our exports have not even reached where we were before at $306 billion last year. Our trade deficit will be somewhere between $193 billion and $196 billion. It is not a small number. That is where the crisis is,” Sharma said.
The Board of Trade meeting suggests steps to prepare the way for the annual supplement to the Foreign Trade Policy (2009-2014), expected to be unveiled in April.
Given the high level of imports and lesser exports, the trade deficit will become challenging because it directly affects the current account deficit, which in turn will put pressure on rupee, Sharma said.
He added a weak rupee would also not help Indian exporters, as importers who will also feel the pinch will ask for more discount.
“The trade deficit was $182 billion in the first 11 months of this fiscal. Whether it will be $ 12 billion or $15 billion more (in March)... Trade deficit will definitely be between $193 billion and $ 196 billion in the current fiscal.
“This is not a small number and that is where the crisis is. Therefore every institution must ensure faster movement,” Sharma said.
“Now it is much more difficult to make that kind of interventions or to work out (that kind of) stimulus packages. Given that growth has not taken place or there has been a downturn, the resource availability has also constrained,” he added.
During the April-February period, exports declined by 4 per cent to $265.95 billion. Imports during the 11-month period grew by a mere 0.25 per cent to $448 billion, leaving a trade deficit of $182.1 billion.
Exporters have called for more market-specific sops that include an export development fund to help promote exports in different countries, an expansion in the focus product, focus market and market-linked focus product schemes that offer cash incentives in the form of duty-free scrips and easier credit.
“We had a free and frank exchange of views and a meaningful discussion. We have received the inputs and suggestions and taken notes on what has been discussed and lets see what we can do, given the constraints and challenges that we have,” Sharma later told reporters.
“Recognising the stress that our trade is going through, and the need to enhance exports, we will be supportive. When we will look at the final figures, we have some idea about final (export) numbers on March, 31 and in 72 hours after that we propose to come out with FTP,” he informed.