New Delhi, Jul 2 (IANS): India's exports dropped by 4.16 percent to $25.68 billion in May due to sluggish demand in European countries, government data showed Monday.

Imports also declined by 7.36 percent to $41.94 billion, leaving a monthly trade deficit of $16.26 billion.

The total value of exports in the first two months of the current financial year stood at $50.13 billion, down 0.69 percent from $50.48 billion recorded in the corresponding period of previous year, according to data released by the ministry of commerce and industry.

The first two months data indicated exports were likely to remain sluggish in the coming months and the whole year target might fall short substantially.

The government has set a target of 20 percent growth in exports in the 2012-13 fiscal.

Exports had increased 20.94 percent to $303.71 billion in financial year ended March 31, 2012, surpassing the government's target of $300 billion.

Cumulative value of imports for the period April-May, 2012-13 was $79.88 billion, as against $81.87 billion recorded during the corresponding period of last fiscal, registering a drop of 2.42 percent.

Non-oil imports dropped by 16.11 percent to $26.95 billion in May.

However, a substantial increase in oil imports kept the trade deficit high.

Oil imports grew by 14.02 percent to $14.98 billion in the month under review. Cumulative value of oil imports in the first two months of the current fiscal was $28.89 billion, 10.51 percent higher than the oil imports bill of $26.14 billion registered during the corresponding period last year.