New Delhi, June 14: India's exports shrank 4.16 per cent to $25.68 billion in May, stumbling on account of the prologed weak demand in the European Union and the US.
Imports dropped at a faster pace of 7.36 per cent to $41.9 billion, signalling a weakening of the economy, especially fresh investments, as inward shipments of plant and machinery fell 8 per cent.
The trade deficit widened to $16.3 billion in May compared with $13.4 billion in April.
The dismal export performance comes on the heels of disappointing industrial output that showed a mere 0.1 per cent expansion in April.
Contraction of demand in India's traditional markets, particularly in the Eurozone economies, is hurting exports, commerce secretary S.R. Rao said. "(We are) still not out of the woods... bailing out of Greece and Spain is still work in progress."
He said the ministry was "recalibrating its strategy to find a solution" to achieve the ambitious 20 per cent growth target in exports for the current fiscal, announced in the recently released foreign trade policy.
Rao expressed hope that the impetus given to market diversification, softening of crude prices and expectations of a normal monsoon would ensure export growth in the near future.
He said the commerce ministry and the directorate general of foreign trade were carrying out an exercise with the exporters to focus more on new markets in Asia, Latin America and Africa.