India's exports grew at an astounding pace of 81.8 per cent to $29.3 billion in July while its imports grew 51.5 per cent to $40.4 billion during the month. However, the country's trade deficit widened to $11.1 billion during July 2011 from $7.7 billion in June 2011.

Announcing this at a press conference in New Delhi today, commerce secretary Rahul Khullar said the increase in shipments were due mainly to high overseas demand for engineering goods, gems and jewelry, and other traditional products.

However, he said, it is doubtful if the current trend will continue under the evolving scenario after the US rating downgrade and the Eurozone crisis.

India's traditional exports like tea, leather etc have not seen any exceptional growth while engineering goods, chemicals and pharmaceutical products had a substantially high share in the current export basket.

"Engineering goods continue to do extremely well," Khullar said. Shipments of engineering goods totalled $8.7 billion in July and $31.6 billion in the first four months of this fiscal year…This export growth is not sustainable," Khullar said, adding that he expected the country's monthly exports to stabilise around $25 billion.

India's exports during April-July 2011 grew 54 per cent to $108.3 billion while imports during the four months grew 40 per cent to $151 billion.

The country's trade deficit during April-July 2011 stood at $42.7 billion.

Khullar said the exceptional performance of the export sector has been due to a rising demand for engineering goods, petroleum products, readymade garments, gems and jewellery. Besides, he said, the strategy to diversify to new markets in Asia, Africa and Latin America have also paid off.

However, the US and Europe still continue to be major markets for India' exports and a demand contraction in these traditional markets is bound to affect the current growth rate of the country's exports, Khullar said.

He expected the export growth to slacken during the current month.

India's exports grew 37.5 per cent in the 2010-11 financial year. The surge in exports helped contain the current account deficit (CAD) to around 2.5 per cent of GDP although in real terms India's current account deficit has grown substantially.

The country also surpassed the export target of $200 billion for 2010-11. An emboldened government has also revised the 2013-14 export target upward to $500 billion, from $450 billion estimated earlier.