World Economic

India’s exports rose for the first time in 14 months as recovery in the global economy boosted year-end holiday demand for the South Asian nation’s products.

Overseas shipments increased 18.2 percent to $13.2 billion in November from a year earlier after sliding an average 21 percent per month since October 2008, according to a trade ministry statement. Imports fell 2.6 percent to $22.8 billion in November, resulting in the trade deficit narrowing to $9.6 billion from $12.3 billion a year ago.

Record-low interest rates and more than $2 trillion in government stimulus worldwide are reviving demand for clothes made by Gokaldas Exports Ltd. and Hyundai Motor Co. cars. South Korea’s exports rose 33.7 percent in December, the fastest pace in 17 months, as Asian economies from China to Singapore recover from the worst global recession since the 1930s.

“We are seeing a rebound in overseas sales mainly due to improved conditions in the U.S. and Europe and festival demand ahead of Christmas,” said N.R. Bhanumurthy, an economist at the National Institute of Public Finance and Policy in New Delhi.

A return to export growth may boost production at companies in India and bolster the revival in Asia’s third-biggest economy, which expanded 7.9 percent in the three months to Sept. 30 from a year earlier, the quickest pace in six quarters.

Gems, Cars

Some sectors have started showing signs of improvement. Overseas sales of Indian gems and jewelry jumped 54.8 percent to $21.4 billion in November compared with $13.8 billion in the same month a year ago, according to the Gem & Jewellery Export Promotion Council. Vehicle exports rose 25 percent in November from a year earlier, the Society of Indian Automobile Manufacturers said Dec. 8.

November’s increase in exports shouldn’t be seen as the beginning of a positive trend, as shipments rose mainly due to a low base in the same month last year, Bhanumurthy said. The difficulties for exporters and the Indian economy are not yet over, he said.

“The surge in inflation will result in increasing input costs for exporters, forcing them to raise prices and making it difficult for them to remain competitive in overseas markets,” Bhanumurthy said.

India’s benchmark wholesale-price index climbed 4.78 percent in November from a year earlier, more than tripling from a 1.34 percent gain in October, the government said Dec. 14. A stronger rupee is also affecting exporters’ earnings, according to the Federation of Indian Export Organisations.

Stronger Currency

The Indian currency strengthened 4.8 percent in 2009 to 46.5275 per dollar at the 5 p.m. close in Mumbai yesterday, according to data compiled by Bloomberg. That was the third-best performance among Asian currencies after Indonesia’s rupiah and the South Korean won.

The rupee gained as foreign funds raised their holdings of the nation’s stocks to a record as the benchmark Sensitive Index rallied the most in 18 years. Indian stock market is closed today due to a holiday.

The low-base effect on November’s export growth mean “there is no need to go hoopla over these numbers,” Trade Secretary Rahul Khullar said Dec. 15. Shipments dropped almost 20 percent in November 2008 from a year earlier.

Overseas sales declined 22.3 percent to $104.24 billion in the eight months to November from a year earlier. Imports fell 27.3 percent to $170.4 billion.

Global Recovery

Non-oil imports dropped 5.9 percent to $16.5 billion in November from a year ago, while oil imports rose 7.3 percent to $6.38 billion in the same month, the government report showed.

The U.S. returned to growth in the third quarter after a yearlong contraction and France, Germany and Japan have exited recession. The U.S. economy, India’s second-biggest export market, expanded 2.2 percent in the July-September quarter.

India is boosting its efforts to increase overseas sales by developing trade agreements with other countries. The South Asian nation in August signed a free-trade accord with South Korea and the 10-member Association of Southeast Asian Nations as it attempts to reduce dependence on the U.S. and Europe, which account for about 40 percent of the nation’s exports.

India in August also announced tax refunds for exporters to explore new markets in Africa and Latin America.

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