India's trade deficit is expected to reach a high of $262 billion to $280 billion in fiscal 2012-13, as exports face headwinds from the western economies, particularly in debt-ridden Europe, exerting further pressure on the country's current account deficit (CAD), according to a study by the Associated Chambers of Commerce and Industry of India (Assocham).
In fiscal 2011-12, the country's merchandise imports totalled $488 billion against exports of $303 billion, leaving negative balance of trade of $185 billion. While export shipments rose 21 per cent in the initial months of the previous fiscal (2011-12) in the backdrop of weak recovery in the US economy and continuing troubles in the European markets, exports fell for most of the remaining part of the fiscal, the study noted.
Imports into the country, on the other hand, shot up by 32 per cent thanks mainly to high crude prices and rising gold and silver imports. Import of these two items alone accounted for a whopping $217 billion, or over 44 per cent of the country's total import bill of $489 billion.
During the current financial year Assocham expects imports to most likely grow at about 25 per cent and exports to grow at a slower 15 per cent, leaving a trade gap of $262 billion.
''Out of the three likely scenario plotted by the Assocham study, the most likely seems to be the one where imports would grow by about 25 per cent in dollar terms and exports increasing by about 15 per cent. This would leave the country with a BoT gap of $262 billion,'' said Rajkumar Dhoot, MP and president, Assocham, while releasing the findings of the study.
''In such a scenario, exports would grow up to $348 billion but import shipments would increase to $610 billion. Even assuming the moderate GDP expansion of 7 per cent, the crude oil imports would remain the biggest import item, as the economic activity would be required to be fuelled by the conventional sources of energy,'' said Dhoot.