Overseas shipments in October dropped 12.1 percent to $12.8 billion from a year earlier, the government said in New Delhi today. The last time exports fell was in October 2001, when they declined 7.4 percent, according to data available on Bloomberg.
Exports may weaken further as foreign buyers stay away from India after the worst terror attacks in the country in 15 years last week. Minister Palaniappan Chidambaram, who switched to the home ministry today from the finance portfolio, said after the attacks that the government will provide help to textile, gems and jewelry exporters as overseas demand wanes.
Terrorist attacks in Mumbai, which began Nov. 26 at two luxury hotels, a railway terminal and a building housing a Jewish center, lasted until Nov. 30, and left 195 people dead.
The government wants to contain the damage to exporters to prevent job losses in an election year. General elections are due by May next year.
Textile exporters may cut about 500,000 jobs by April if overseas demand does not recover, according to India’s textile ministry. India’s merchandise exports make up about 15 percent of India’s $1.2 trillion economy.
The Reserve Bank of India last month announced steps to inject 220 billion rupees ($4.5 billion) into the financial system to help exporters. Among the steps it announced, the central bank agreed to extend the period for subsidized pre- shipment credit to nine months from six months and increased the export refinance limit for commercial banks.
India’s exports in the seven months ended Oct. 31 rose 23.7 percent from a year earlier to $107.8 billion, today’s report showed. Imports rose 36.2 percent to $180.8 billion. That brings the trade deficit to $72.9 billion, compared with $45.6 billion in the same period a year earlier.
India aims to reduce its export reliance on the European Union and the U.S. and tap markets in Asia and Africa, according to the commerce ministry.
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 Reserve Bank of India.
In the same period, shipments to Asian countries increased to 30.9 percent, compared with 30.2 percent, according to the central bank. India gives a more detailed analysis of exports five to six months after the initial data.
Since October, 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, to stimulate demand.
Growth in the economy has already slowed for two straight quarters, with the 7.6 percent pace of expansion in the three months to Sept. 30 the weakest in four years.