A dip in petroleum product exports for the first time in the current fiscal has contributed to a 22 per cent decline in merchandise exports in January, commerce ministry data reveals.

Petroleum products, which account for 15 per cent of India's exports, reported a more than 24 per cent dip to $1.8 billion in January.

Three other products--basic chemicals, textiles, gems and jewellery--that account for around 70 of merchandise exports led the dip in dollar-denominated exports in January 2009. These three products declined between 15 and 33 per cent.

In fact, rupee-denominated exports have also dipped 4 per cent in the same month, even as the rupee depreciated over 20 per cent in annual terms against the dollar. This is the first time in five years that exports have dipped in rupee terms. Depreciation of the rupee against the greenback is supposed to increase earnings of exporters in the Indian currency.

Sources told Business Standard that of about 25 broad categories of exports, only four--engineering goods, tobacco, spices and cashew--registered a growth.

In the April-January period, Indian exports increased an estimated 12 per cent against a 24 per cent rise in the same period of 2007-08. The commerce ministry expects Indian exports to grow by a mere 5 per cent in 2008-09, as against the targeted 25 per cent.

When the final export-related numbers are released on March 1, January may record the sharpest fall in merchandise exports, since the Reserve Bank of India [Get Quote] started maintaining records of overseas sale of Indian goods in 1990. Exports in January, 2007 expanded 35 per cent.

Lower product demand and falling oil prices blamed: A sharp decline in international crude oil prices in the last five months and lower demand from developed economies are cited as reasons for lower petroleum exports.

In particular, crude oil prices in January were over 50 per cent cheaper than the same month last year.

Demand for fuels in overseas economies has also dropped because of the ongoing economic crisis. As a result, the prices of petroleum products dipped, taking down the value of India's exports of petroleum products. The export-oriented refinery of Reliance [Get Quote] Industry Ltd at Jamnagar accounts for most of the country's petroleum exports.

Another large export sector that fell during the month was gems and jewellery, which accounts for one tenth of India's exports. As unemployment rates in key markets like the United States increase because of the most severe recession since the great depression of 1929, demand for jewellery has plummeted. Commerce ministry estimates about 400,000 job losses in the April to January period in this sector as overseas orders dry up. Similarly, labour-intensive sectors like textiles, handicrafts and carpets  continue to take a beating in exports.

Engineering exports like cars, steel products, which account for nearly a fourth of India's exports, grew only marginally in January 2009 against double-digit growth in corresponding period year-ago.