Dec. 2 – India’s exports declined for the first time in seven years as the economy reeled under the impact of the global slowdown in key export markets and slowing output at home. India's exports declined by 12.1 percent in October to US$12.82 billion, the first year on year fall in nearly three years. Imports however grew by 10.6 percent to US$23.36 billion in October compared to US$21.12 billion in the same month last year. As a result, trade deficit narrowed slightly to US$10.54 billion in October compared with US$10.63 billion in September.

Exports during April to October were up 23.7 percent at US$107.8 billion from a year earlier, while the trade deficit during the period stood at US$73 billion, from US$45.64 billion a year ago. Overseas shipments in October dropped 12.1 percent to US$12.8 billion from a year earlier, the government said in New Delhi today. The last time exports fell was in October 2001, when they declined 7.4 percent, according to data available on Bloomberg. Textile, gems and jewelry exporters are expected to be hit the most.

India aims to reduce its export reliance on the European Union and the U.S. and tap markets in Asia and Africa, according to the commerce ministry.

Manufacturing output in the world’s fourth largest economy also shrank for the first time in three-and-a-half years in November, according to the ABN AMRO Bank's purchasing managers' index (PMI), which is based on a survey of 500 companies. India’s adjusted PMI fell to 45.8 in November, the first time it has contracted since the survey began in April 2005 and well below October's 52.2. A reading above 50 signals economic expansion while a figure below 50 suggests contraction.

"Even as external demand shrunk, it appears that much more rapid domestic demand destruction occurred in November," said Gaurav Kapur, senior economist at ABN AMRO.