MUMBAI: Ratings agency CARE recently said it expects India's exports to grow at 8- 10% and imports to grow at 10-11% in 2017-18. However, it added that with the rupee reining below 64/$, there is concern that any further appreciation would slowdown exports.
“While the exports have grown to a certain extent following the pick-up in the global demand, the imports have also gone up due to increasing oil prices at the international level. Going ahead, the oil prices are expected to remain range bound however, the global demand is expected to continue its momentum,” CARE Ratings said.
“On this background, we expect exports to grow at 8- 10% in 2017-18. Higher Government spending would provide the impetus for private investments and industrial output on the domestic front,” it added.
Opining that industrial output is expected to pick-up in the second half of the year resulting in higher demand for imports, it said, this coupled with the firming up of commodity prices would result in imports growing by around 10-11% in 2017-18.
The rupee has been strengthening over time which could have at the margin militated against faster growth in exports, the ratings agency said, adding that “with the rupee reining below Rs 64/$, there is concern that any further appreciation would slowdown exports even further.” Exporting industries and the IT sector would be particularly affected by this currency movement, it added.
In its assessment of the trends in India’s foreign trade in the first four months of current fiscal year FY18 vis-à-vis previous years in the comparable periods, CARE Ratings said “Trade deficit narrowed from $59.3 billion in FY14 (Apr-Jul) to $26.6 billion in FY17 (Apr-Jul).” It added, “However, in FY18 (Apr-July) the trade deficit widened to $51.5 billion. The higher trade deficit can in part be attributed to higher growth in imports on account of increase in gold imports and higher crude oil and commodity prices in global markets.”