Indias Exports Jump as Investors Turn Optimistic

India's Exports Jump as Investors Turn Optimistic

India's car industry sales rebounded by 15% in August on an annual basis, but the industry said the reprieve was temporary and that the sector was expected to contract for a second straight year.

NEW DELHI -- In a sign the falling rupee is starting to help Asia's third-largest economy,  Indian exports climbed by nearly 13% in August on a 12-month basis.

The trade deficit in August fell to $10.9 billion from $14.17 billion in the same month a year earlier, according to commerce ministry figures.

Merchandise exports climbed by 12.3% in August to $26.14 billion from a year earlier while imports fell by 0.7% year-on-year to $37.05 billion.

"Exports are on a firm, positive terrain now. I remain optimistic about exports being in positive territory," Trade Minister Anand Sharma said as he released the figures.

In other positive news, shares climbed by nearly 4% and the currency continued to gain in value against the dollar after hitting a string of record lows in recent months. The rupee slid to a lifetime low of 68.85 against the dollar last month on concern about India's capacity to fund a record current account deficit -- the broadest measure of trade.

But the currency began rallying last week after the appointment of a new central bank governor, Raghuram Rajan, a former International Monetary Fund chief economist.

Rajan sought to reassure markets, saying India faced tough challenges but its economy was "fundamentally sound" despite growing at five percent last year -- its slowest pace in a decade due to high inflation and borrowing costs as well as weak business confidence.

India's currency jumped 1.5% Tuesday from the previous trading day to 64.28 rupees to the dollar and is now down around 15% this calendar year.

The rupee has also been lifted by weak U.S. jobs data that has eased worries that the U.S. Federal Reserve may start rolling back economic stimulus that has fuelled investor fund flows to emerging markets.

Separately, India's car industry sales rebounded by 15% in August on an annual basis, but the industry said the reprieve was temporary and that the sector was expected to contract for a second straight year.

Carmakers sold 133,486 cars in India in August, up 15.4% from the same month in 2012, snapping a record nine months of declining sales, according to the Society of Indian Automobile Manufacturers (SIAM). But the increase came off a low base due to weak output in the same month in 2012 caused by the temporary shutdown of a key car manufacturing plant.

"This is not a turnaround, it's going to be another year of negative growth in car sales," SIAM Deputy Director General Sugato Sen said.

Last year, domestic passenger car sales fell by 6.7% to 1.89 million from a year earlier -- the first contraction in a decade.

Copyright Agence France-Presse, 2013

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