India frets that trade gains could unravel as deficit widens

India's trade deficit in March was the highest in four months, at $11.79 billion, as exports continued to fall, underscoring risks for growth prospects in Asia's third largest economy.
A plunge in global prices of crude oil, by nearly half since last June, has slashed India's import bill, making for a less worrisome trade deficit, despite a drop in exports in recent months.
That could be about to change, with policymakers and businesses fretting that weak foreign demand could torpedo Prime Minister Narendra Modi's globe-trotting 'Make in India' campaign to boost export-oriented investment.
Since winning power last May, Modi has visited major economies, including the United States, Japan, France, Germany and Canada, and set a goal of doubling exports to $900 billion over the next four years.
Annual figures published on Friday for the full fiscal year that ended in March showed merchandise exports declined 1.2 percent to $310.5 billion, while imports were down 0.6 percent, at $447.6 billion.
That widened the annual trade deficit for Asia's third-largest economy to $137 billion in the 2014/15 fiscal year from $135.8 billion in the preceding year, with the fall in net exports likely to hurt gross domestic product.
A closer look at the monthly figures shows a sharp slide in both imports and exports since September, however. Economists worry exports could remain sluggish if demand in major markets, such as Europe, slumps further and the rupee appreciates.
"Reforms that would significantly boost export prospects, such as loosening labour laws and easing land acquisition, have not been forthcoming. Unless this changes, exports look set to remain a weak spot," said Shilan Shah, India economist at Capital Economics in London.
"Growth in exports is very important for India to meet its
ambition of growing at double digits, but very little could be done in the short-term to push exports," he said.
The Reserve Bank of India has cut interest rates twice this year, and is intervening in forex markets from time to time to curb the rupee - a relief for exporters hit by the euro's decline of a fifth against the Indian currency over the past year.