INDIA'S exports are continuing to grow - despite failing to meet target levels at times - and the country is confident of sustaining the momentum in its foreign trade. The country is also benefiting from the effect of European nations paying India increasing attention after noticing its potential as a trading and joint-venture partner. India's exports increased by nearly 10 per cent in value in the first quarter of the current financial year to US$5.6 billion, while imports increased at a lower rate. While exports had a double-digit increase in the April to June period, imports climbed 7.05 per cent to US$5.81 billion, according to recent Commerce Ministry data. There are expectations that exports will increase by about 25 per cent in the current financial year. Officials hope export values will rise by 20 per cent from US$22.2 billion to about US$27 billion during this financial year. The Commerce Ministry has targeted an improved performance in the export trade to make up for export sales lost in the wake of the disintegration of the former Soviet Union, which was India's largest market. Further growth is expected from sectors such as textiles, computer software, motor vehicle parts, engineering, agricultural products, gems, jewellery and leather. Even India's food grain producers, who have been buoyed by bumper outputs of more than 180 million tonnes, are expected to explore overseas markets, although some officials admit the scope is limited. Others say there are possibilities for rice exports now that Japan, Taiwan and South Korea have removed restrictions imposed in their markets. Rice exports are expected to double to about 1.2 million tonnes in the next financial year from about 600,000 tonnes this financial year. Food grain stocks for May grew to almost 32 million tonnes from about 26 million in April - prompting traders to look at overseas markets. Private traders in India are already exporting super-fine basmati and non-basmati rice and superior varieties of wheat. European nations have started to pay more attention to India, after noticing its potential as a trading partner. Early this month, the German Minister for Foreign Affairs, Klaus Kinkel, visited New Delhi to explore ways of enhancing the level of trade and investment. Mr Kinkel said that, in less than three years, the German-Indian trade volume would increase from HK$19.2 billion to HK$28.8 billion. In July, China's Foreign Minister, Qian Qichen, signed a pact concerning avoidance of double taxation during a visit to India. The agreement will help in promoting mutual trade and flow of investment and technology. Sino-Indian trade totalled US$675 million last year, up from US$264 million three years ago. India mainly exports ore, steel and chemicals to China. Its principal imports are raw silk, chemicals and machinery. India's overall imports are also expected to continue climbing, following an increase of 6.8 per cent to US$22.1 billion in the last fiscal year. With industries showing signs of recovery after three years of stagnation, imports are forecast to grow between 11 and 12 per cent in dollar terms. Imports of machinery and industrial raw materials will account for much of the growth. But the Finance Ministry has estimated that exports will grow at a rate of about 15 per cent in the current fiscal year. Officials believe that as the benefits of the General Agreement on Trade and Tariffs begin to trickle down, exports will grow, especially as markets open up in industrialised nations. However, analysts claim export growth will depend on several factors, including infrastructure, industrial performance, easy availability of credit and price stability. They say price stability in the economy and export competitiveness are closely linked. In an effort to boost the competitive position of exporters in relation to their international counterparts, the Reserve Bank of India has began granting pre-shipment credit in foreign currencies. The facility, introduced last year, carries an interest of not more than two per cent over the London Interbank Borrowing Rate (LIBOR), while credit in the domestic currency carries an interest rate of 13 per cent. Following the launch of the scheme, banks in India have extended loans to the tune of US$200 million, according to a report in the monthly economic bulletin India Economic Update. These financing facilities are also expected to have a beneficial effect on exporters.