A decline in exports, as witnessed in February for first time in eight months, is expected to continue for more time as the European Union has withdrawn preferential treatment to merchandise shipments from India, according to a report by State Bank Research.
"Decline in exports may continue," the report said on Tuesday, hours after the release of official data, which showed that exports from India contracted by 3.7 per cent in February this year to $25.7 billion. (Read more)
However, trade deficit fell to $8.1 billion from $9.9 billion in January due to a sharp fall in imports.
SBI said benefits under the EU's generalised scheme of preferences, designed to support exports from developing countries, will not be applicable to India now, hampering shipments from the country.
As a result of this, the exports of mineral products, textiles, motor vehicles, bicycles and chemicals are expected to suffer as they will no longer enjoy any preferential treatment, it said.
The SBI report said India will end the ongoing fiscal year with a current account deficit of 434 billion, or 1.8 per cent of GDP, but sounded concerned on the gold import front.
"Although gold imports from official channels have declined, the vast inelastic demand for gold further fuelled by high domestic prices, has now been made good by unofficial channels," it said.
Essential Business Intelligence, Sharp Market Insights, Practical Personal Finance Advice, Daily Fuel, Gold and Silver Prices and Latest Stories — On NDTV Profit.
