Overseas shipments, which account for about 15 percent of the economy, rose 10.4 percent to $13.7 billion from a year earlier, after gaining 27 percent in August, the government said in New Delhi today. Imports increased 43.3 percent to $24.4 billion, widening the trade deficit to $10.6 billion.
Flagging exports and waning domestic demand are forcing companies in India to cut production, weakening growth in an economy expected by the central bank to expand at the slowest pace in four years. Sales overseas are slowing as the global credit crunch crimps spending by customers in Europe and the U.S., Asia's biggest overseas markets.
To spur local demand and shield India's $1.2 trillion economy from the global slowdown, the central bank on Nov. 1 unexpectedly cut interest rates for the second time in two weeks and reduced the amount of money lenders must hold in reserve.
The Reserve Bank of India lowered its repurchase rate to 7.5 percent from 8 percent, reduced the amount of deposits that lenders need to set aside as reserves to 5.5 percent from 6.5 percent, and cut the amount of money lenders are required to keep in government bonds to 24 percent from 25 percent.
India's exports in the six months ended Sept. 30 rose 31 percent from a year earlier to $94.9 billion, today's report showed. Imports rose 38.6 percent to $ 1.54 trillion. That brings the trade deficit to $59.7 billion, compared with $39 billion in the same period a year earlier.
The U.S. share of India's total exports declined to 10.3 percent in the two months to May 31, compared with 13.2 percent a year earlier, according to the latest breakdown of overseas sales from the central bank.
In the same period, shipments to Asian countries increased to 30.9 percent, compared with 30.2 percent, according to the Reserve Bank of India. India gives a more detailed analysis of exports five to six months after the initial data.
India's major export markets have shifted from developed regions such as the European Union and the U.S. to diversified markets such as Asia, OPEC and African countries, according to the central bank.
India's oil imports in September rose 57 percent to $9.09 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 36 percent to $15.3 billion.