India's exports fell 12 per cent in October 2008-09 compared to exports in October last year - the first fall in seven years - amidst sagging demand from its top two markets, the US and Europe.
The country's current account deficit rose 61 per cent to $10.53 billion, which is likely to push the overall trade deficit to well over $110 billion.
Exports in October declined 12.1 per cent to $12.8 billion against $14.58 billion a year ago, while imports grew 10.6 per cent to $23.36 billion against $21.12 billion in the year-ago period.
Imports in September were up 43.3 per cent on account of the high crude oil prices, which have since dropped sharply.
In the first seven months of fiscal 2008-09 ended October, exports rose 21.5 per cent against 23.7 per cent in the same period last year, while it was above 30 per cent for the six months ended September this year.
India's exports stood at $162.9 billion last year and the government has set a current year export target of $200 billion, which now looks difficult to achieve.
According to preliminary estimates by the commerce department, the decline in exports in October was sharper at 20 per cent if petroleum - the only major sector registering an increase in exports during the month - was excluded.
''Apart from oil products and a couple of small sectors, exports from all other areas dipped in October. The data indicates the difficult times exports are going to face,'' RS Gujral, director general of foreign trade (DGFT), said .
The falling exports have affected the labour-intensive sectors like textiles, garments, handicrafts, leather goods and gems & jewellery.
India's exports to the two main markets – US and Europe – account for 35 per cent of the country's total exports.
The coming months are likely to be crucial as Indian exports will continue to fall amidst the global economic downturn.
The Federation of Indian Chambers of Commerce and Industry (FICCI) has urged the government to come out with a package to help Indian exporters tide over the current credit crisis and weak global demand in the international market.
The government has recently announced an extension of the period of entitlement for pre-shipment and post-shipment rupee export credit to help exporters. Exporters, however, feel these measures are inadequate.