Export Growth Aided by Demand Revival in US, Europe: Industry

India Inc on Wednesday said a pick-up in growth of exports in May was aided by the economic revival in the US and Europe, among the country's biggest trade partners.

"Acceleration in export growth is good news. Double-digit rise...reflects our exporters' hard work that has been helped by revival in demand in the US and Europe," Ficci president Sidharth Birla said.

Helped by healthy growth in engineering, petroleum products and garments, exports in May increased 12.4 per cent to $28 billion, while imports dipped 11.4 per cent to $39.23 billion. (Read more)

"This sends out a strong signal that the Indian economy is striding into recovery," said Sanjay Budhia, chairman of CII's export-import committee.

While there was optimism on export growth, some expressed caution about its sustainability.

"We expect the positive trend to continue provided we reduce transaction costs. Hopefully, the problems relating to power shortages in most parts of India would not come in the way, especially of manufacturers," said Anupam Shah, chairman of engineering exporters' body EEPC India.

The pick-up in export growth in May benefits from a benign base effect and is unlikely to prove sustainable over the coming months, said Aditi Nayar, senior economist at rating agency ICRA, an associate of Moody's Investors Service.

"With monsoon-related concerns clouding efforts to contain inflation, competitiveness of Indian exports would be eroded if the rupee appreciates on the back of healthy foreign institutional investor inflows," she said.

Federation of Indian Export Organisations (FIEO) president M Rafeeque Ahmed said the rise in exports seems to be the beginning of an upward growth backed by better global trade forecast for 2014 and 2015.

Assocham secretary general D S Rawat said that keeping the trade deficit, which rose to a 10-month high of $11.23 billion in May, within sustainable limits is fraught with challenges.

"Fall in imports of capital goods owing to India's lower investment activity in the recent past has helped the cause of the trade balance. However, as domestic investment activity picks up, import of capital goods too would see a jump," he said.