NEW DELHI, June 1: Indian exports grew a cracking 18 per cent year-on-year in April on increased demand from its key markets, Europe and the United States, but analysts said the possibility of a war with neighbour Pakistan threatened future growth.

Figures released by the Commerce and Industry Ministry on Saturday showed exports in April, the first month of the current financial year, at $3.68 billion, up from $3.11 billion in the same period last year.

“The growth is mainly due to increased orders from the United States,” Arun Kumar, economist with the New Delhi-based Jawaharlal Nehru University, said.

“There may be some problem due to war risk because buyers may cancel orders fearing delay in shipments,” he added.

Tensions between the nuclear-capable neighbours have been on the boil with war clouds looming large after India held Pakistan-based Islamic militants responsible for a raid on an army camp early this month. Thirty-one people including women and children were killed in the attack.

Both countries have deployed about a million troops along their common border in a confrontation triggered by a bloody December attack on India’s parliament that New Delhi blamed on Pakistan-based militants.

“The environment is not at all conducive for exports. We would see the impact of current uncertainty in the coming months,” said trade analyst Arun Goyal.

India’s export growth was flat in the year ended March 2002, with demand weak in its main markets particularly after the September air attacks in the United States.

The United States accounts for a quarter of India’s exports with Europe and Japan being the other key markets.

India aims to boost the country’s share of global trade to 1 per cent by 2007 from a paltry 0.67 per cent now as part of its five-year trade plan. It has not set a target for the current year.

Analysts said a full blown war with Pakistan would also lead to a spurt in imports, mainly defence equipment, and a higher trade deficit.

Imports in April totalled $4.09 billion, down marginally from 4.093 billion in the same period last year, bringing some cheer for the country’s trade deficit.

Oil imports grew 8.31 per cent at $1.29 billion while non-oil imports, a pointer to the industrial activity in the economy, dipped 0.09 per cent.

Analysts said a dip in non-oil imports meant industrial activity was likely to remain sluggish in the coming months as well.

Industrial growth in 2001/02 (April-March) was a meagre 2.7 per cent, almost half of 5 per cent growth logged in the previous year.—Reuters