(Corrects paragraph 6 to show May imports were $39 billion, not
NEW DELHI, June 11 India's exports increased at
the fastest pace in six months in May, in a boost for Prime
Minister Narendra Modi's new government as it signalled a
loosening of gold import rules and a push to improve trade ties
with the United States.
Bilateral trade stands at about $100 billion annually but is
below potential due to disputes over protectionism and
intellectual property rights that have worsened in the past two
Trade secretary Rajeev Kher said the two countries were
planning to start trade talks in July and could hold a
ministerial level engagement in October - after an expected
summit between Modi and President Barack Obama in Washington.
India's exports have risen in recent months due to a pick-up
in demand from Europe and the United States and a weaker rupee
currency, while strict controls on gold imports have helped
prevent a brewing balance of payments crisis last year.
The trade deficit stood at $11.23 billion in
May, up from $10.09 billion in April, data released by the
Ministry of Commerce and Industry showed.
While trade gap grew compared with April, the year-on-year
trend was more encouraging. Exports in May jumped 12.4 percent
from a year earlier to $28 billion, while imports were down
11.41 percent to $39 billion, helped by a 72 percent drop in
overseas gold purchases.
India is the world's second-biggest gold buyer and the
government is under pressure from the industry to loosen
restrictions, including a 10 percent import duty on the metal.
Kher said the trade ministry was in favour of
"rationalising" the import duty and that there was a clear view
that "normalcy" needed to be restored to gold imports.
"Export figures have begun to acquire their normal levels,
which is encouraging," he told reporters.
Kher said he also favoured opening up agricultural exports,
where possible, but added the government was ready to intervene
if needed to contain onion and milk prices, key drivers of
India's volatile food inflation.
Although month-on-month increases in the import bill,
particularly for oil, has kept the trade deficit high for three
months in a row, analysts said the trade gap should be
manageable, even with softer restrictions on gold.
"With better economic activity especially in the U.S. and
Europe, Indian exports are likely to stay on a reasonably better
footing this time," said Anubhuti Sahay, an economist with
Standard Chartered Bank in Mumbai.
"Unless global growth disappoints, risks to the trade
deficit remain contained even if gold import restrictions are
relaxed further," he said.
(Reporting by Rajesh Kumar Singh; Writing by Frank Jack Daniel;
Editing by Douglas Busvine and Simon Cameron-Moore)