India's merchandise exports surged nearly 14 percent in November driven by large holiday season orders from its main markets in the US and Europe and analysts said they were on course to meet the 12 percent annual target.
Export growth was back to double-digit in November after dipping to five percent in October and analysts lauded the performance which was achieved despite the rupee rising against the dollar.
"There will be month-on-month fluctuations. Exports are well on their way to achieve the 12 percent growth target," said Sunil Sinha, economist at National Council for Applied Economic Research (NCAER).
"This shows that the rising rupee has not impacted the competitiveness of Indian exports although they might have hurt margins."
The rupee ended the year on Wednesday with a record 5.24 percent gain against the dollar on a flood of foreign investments into a rapidly expanding economy.
"The pick-up in exports after slipping in October augurs well for our industrial sector as 80 percent of exports is industrial goods," said D.H. Pai Panandikar, economist with corporate think-tank, RPG Foundation.
Boosted by strong demand, India's industrial output rose a healthy 5.4 percent in the year through October.
The manufacturing sector is undergoing a transformation in India as companies restructure and cut costs to remain globally competitive. They are also making efficient use of machinery installed in the 1990's.
Data released by the Commerce and Industry Ministry on Thursday showed Indian merchandise exports rose a hefty 13.74 percent in November to $4.49 billion from $ 3.95 in the same year earlier period.
But the trade deficit also rose sharply on the back of an increase in imports as factories churned out more goods to meet robust demand, fuelled by a rise in incomes after bumper crops.
The deficit widened to $1.91 billion from $1.12 billion a year earlier, continuing its recent trend.
In October, the deficit doubled on surging imports as Asia's third largest economy gathered pace. The deficit also doubled in April-November to $11.21 billion from $5.57 billion a year earlier.
India's economy, one of the fastest growing in the world, is set to grow more than seven percent in the year to March, 2004, driven by the best monsoon in a decade, and jumped 8.4 percent in the July-September quarter, up from 5.2 a year earlier.
Exports contribute nearly 10 percent to India's gross domestic product and is a also key demand driver for the industrial sector.
Reflecting strong industrial activity, non-oil imports surged 25.89 percent between April and November to $34.92 billion from $27.74 billion a year earlier.
"This is a very heartening sign. It again shows that some investments are taking place. More raw materials are being imported, value-added and then re-exported," said NCAER's Sinha.
India's has a 0.67 percent share of global trade and aims to capture one percent share by 2007.
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