The pickup in exports for the fourth straight month in a row from should bring a sigh of relief to the ministry of commerce and industry which has seen exports been battered for almost two years with the fall accelerating to even close to a quarter in some months. Exports growth has since recovered with numbers going up from 4.6% in September to 9.6% in October. However, it slipped to 2.3% in November and then recovered to 5.7% in December. Though imports have been rising even faster, on account of the pickup in oil prices the sharp fall in gold imports in the most recent month has helped restrain any sharp escalation in the trade deficit.

Though trade balance has deteriorated by double digits in the last three months, a sharp inflexion from the benign trends over the last one year, the overall trade balance in the first nine months of the fiscal year has been almost a quarter lower than in the last year. But what is disturbing is that there are no sign of a recovery in domestic demand as non-oil imports, despite the sharp fall in gold and silver, continue to fall albeit at a lower rate of 3% in December.

Though the gains on the export front has been achieved on the low base month numbers when exports had contracted very sharply India is still one of the early beneficiaries of the slow revival in global demand which perked up by 3.9% in October. And the global recovery in exports has been skewed with most of the gains being restricted to Africa and Asia. Among developed countries the big gainers are Japan, United States and Mexico whereas Europe lags behind.

However, it would be imprudent to gain much comfort from the recent trends as numbers show that India’s gains has been overshadowed by other competing nations. For instance when Indian exports rose by 2.3% in November that of Australia by 23.4%, Indonesia rose by 21.3%, Vietnam by 16.1%, Thailand by 10.2%, South Africa up by 8.5% and Malaysia by 7.1%. Countries which under performed India in the month included China where the gains was a negligible 0.1% and South Korea which made do with a limited 2.5%.

Certainly India would have to race ahead to boost competitiveness. One reason for some solace is that important export segments where India has done well in recent years continue to show much more traction. For instance December figures show that gems and jewellery exports has soared by 27.9%, drugs and pharmaceuticals by 12.5%, organic and inorganic chemicals by 18.2% engineering goods by 19.9% and of petroleum products by 8.2%.