News: India targets 20 pct export growth in 2006/07

(RTR 07/04/2006) New Delhi - India said on Friday it was aiming for 20 percent growth in exports in 2006/07 as demand from traditional and new markets increased but analysts said it would have to step up infrastructure improvements to reach its goal.

Exports from India, Asia's third-largest economy, crossed the $100-billion mark for the first time ever in the last financial year which ended on March 31, hitting $101 billion, Commerce and Industry Minister Kamal Nath said on Friday.

He told a business seminar exports grew 25 percent on robust demand from traditional markets in the United States and Europe, while imports surged 32 percent to $140 billion.

India is trying to upgrade its poor road network, congested ports and overloaded power sector. Analysts say this is necessary if the country wants to raise exports.

"It is not impossible to achieve the 20 percent growth but infrastructure has to improve to sustain strong exports," said Saumitra Chaudhuri, economic adviser to domestic credit rating agency ICRA.

News of the increase in exports bolstered sentiment for the Indian rupee , which was recovering from a three-month low in early trade on Friday. It was quoted at 44.69/44.70 per dollar by 1045 GMT from 44.7425 earlier.

BOOSTING TRADE, MARKET SHARE

Stronger exports have boosted the government's confidence that India can double its share in global trade from just 1 percent by 2009, although it falls far short of rival China, which had exports worth $55 billion in February alone.

"We have seen the trade winds changing. The centre of gravity of trade has shifted from the Atlantic Ocean to the Indian Ocean," Nath said.

Exports account for nearly 10 percent of gross domestic product and have bailed out the manufacturing sector during years of sluggish domestic demand.

Imports have risen on robust industrial output and as the fast-growing economy, estimated to have expanded at a rate of 8.1 percent in the fiscal year 2005/06, sucked in more foreign goods.

Nath, unveiling a series of steps to boost trade, noted that rising exports had created 1.4 million jobs, both direct and indirect, in 2004/05 and said exports could hit $165 billion by 2009/10.

Trade in services, which already constitute 52 percent of GDP, exceeded $100 billion in 2005/06.

Nath announced incentives for the gems and jewellery trade, auto components and aviation to enable India to win market share from other Asian countries.

India will treat refuelling and supply of food and beverages for long distance flights as exports, entitling them to benefits under a government export promotion scheme.

These have emerged as a big business opportunity and many airlines currently replenish supplies or refuel in Thailand, Malaysia or Singapore.

"This will hopefully enable India to offer competitive fuel prices and will attract mid-route stops of international flights," Nath told the seminar.

Industry groups said the measures would help boost exports.

"The foreign trade policy has been export centric," Sanjay Budhia, a trade official at the Confederation of Indian Industry.

"The kind of buoyancy we are witnessing in manufacturing it's not surprising that we will achieve 20 percent growth in exports."