India's exports entered the negative zone after a gap of four months, recording a contraction of 1.1 per cent in May and leading to a trade deficit of USD 20.1 billion, highest in the last seven months.
The decline in shipments, according to Commerce Secretary S R Rao is mainly due to the steps taken by the government to suspend gold trading in special economic zones (SEZs).
Goldexports from SEZs in May declined by USD 0.8 billion. Besides problems in gold, weakness in the European markets has also impacted exports growth.
The country's exports in May stood at USD 24.51 billion compared to USD 24.78 billion in the same month of 2012. Imports in May grew by 6.99 per cent to USD 44.65 billion.
"As far as trade deficit is concerned, it is very worrisome...It is largely contributed by heavy imports of gold and silver," Rao said.
Gold and silver imports, during the month under review, grew by 89 per cent to USD 8.39 billion. During April-May period, it grew by 109 per cent to USD 15.88 billion.
However, exports during the first two months of the fiscal grew by 0.21 per cent to USD 48.67 billion. Imports during the period was up by 8.88 per cent to USD 86.6 billion.
"Exports in May, there has been a negative growth which is largely contributed because government in the beginning of May has put restrictions on gold trading in SEZs," he said.
Oil and non-oil imports in May grew by 3 per cent and 9.1per cent to USD 15 billion and USD 29.62 billion respectively.
The Secretary said hopefully from June, exports willbounce back as gold trading activities have started again in SEZs.
"We have now made it mandatory that even in SEZ, gold units shall comply with the DGFT notification of minimum value addition of 3 per cent in gold jewellery and 5 per cent in gold and precious stone studded jewellery," Rao said.
Prior to May 1, the value addition norm were notapplicable for SEZ exports and now this has to be adhered to.