As demand is yet to recover completely in developed markets, India’s export grew by

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22.5 per cent in August at $16.64 billion as compared to $13.58 billion during the same month last year. However, imports went up by 32.2 per cent in August at $29.67 billion vis-à-vis $22.44 billion in August last year, resulting in wider trade deficit.

According to data released by commerce ministry on Friday, India’s trade deficit widened to $13.03 billion in August on the back of 12.4 per cent jump in oil imports in August at $7.79 billion vis-à-vis $6.94 billion in August last year while non-oil imports went up by 41.1 per cent to $21.88 billion as compared to $15.51 billion during the same month last year.

“Growth in exports continues to be low vis-à-vis first quarter but we might see some improvement from October onwards. Even the measures announced in the annual supplement to the Foreign Trade Policy will enable exporters to tide over the crisis,” commerce secretary Rahul Khullar had said earlier.

During April-August, exports went up by 28.6 per cent at $85.27 billion as against $66.33 billion during the same period last year while imports for the first five months of the ongoing financial year jumped by 33.1 per cent at $141.89 billion vis-à-vis $106.61 billion last year. Cumulative trade deficit for the first five months stood at $56.62 billion between April and August vis-à-vis a deficit of $40.28 billion during same period last year.

However, the widening trade deficit is an area of concern. With an average trade deficit of $11.2 billion per month, it is expected that India’s trade deficit will be $135 billion in 2010-11 on a pro rata basis. This would be the highest ever and surpass the earlier peak of $118 billion two years back.

“The widening trade deficit is not a healthy sign and would put pressure on India’s GDP in days to come though it still continues to be within manageable levels,” Subhash Mittal, chairman, Payal International said.

According to Mittal, while India’s export has been on track so far, the appreciation of rupee would put pressure on margins. “Further, the US economy, which has been our key market, is still not completely out of woods and therefore sustaining the growth momentum would be a challenge in coming months and may result in lower exports than the set target of $200 billion for 2010-11,” he added.

Federation of Indian Export Organisations, on the contrary, feels that India may surpass the export target of $200 billion. “India’s exporters are on our course to realize the export target or even surpass it to reach $210 billion as a result of diversification of export markets and strategic initiatives like Focus Market and Focus Product Scheme,” A Sakthivel, president, FIEO added.