Exporters bet on better FY14

Expectation among experts for revival of demand in both older and newer markets

There is optimism on export growth this year among those involved in the trade and experts are betting on a revival in demand in some of the newer markets and the older ones.

The government is projecting a 10 per cent growth after the unsatisfactory performance in 2012-13 but quite a few exporters are less conservative. In FY13, exports fell 4.4 per cent to $300.6 billion, pulled down mainly by engineering goods, manmade textiles and apparel. There is hope on these fronts this year.

“North America is recovering," said A Sakthivel, chairman, Apparel Export Promotion Council. “Our order book positions are better and we are receiving positive feedback of US economic revival, the biggest destination for Indian clothing exports. In the case of the EU (European Union), we are keeping our figure crossed, as recovery is very slow, especially in the 17 countries of the Euro zone. We are exploring new markets, trying to penetrate where India has signed Free Trade Agreements (FTA) and Preferential Trade Agreements, as these markets give us duty-free access.”

Last month, while announcing the stimulus package for exporters in the annual supplement to the Foreign Trade Policy 2009-2014, commerce secretary S R Rao had said exports might rise by 10 per cent in FY14 over FY13. However, exporters are confident of a rise of 20-25 per cent, at $360-365 bn.

“This would be because of change in the direction of trade,” averred Ajay Sahai, director general, Federation of Indian Export Organisations. “We have reduced our dependence on Europe over the years, a part of the globe which is struggling to revive. Besides, the US is improving. Also, our recently signed CEPA (Comprehensive Economic Partnership Agreements) and FTAs will help.”

In the March quarter of 2012-13, exports registered positive month-on-month growth for those three months, rising 0.8 per cent, 4.2 per cent and seven per cent, respectively, after outbound shipment had contracted for eight months in a row. According to the Prime Minister’s Economic Advisory Council, exports should continue this positive run in FY14, due to a rise in export of gems and jewellery, pharmaceuticals, chemicals and agricultural products. It did warn, though, that this was not certain.

Besides, the PMEAC notes, exports from India are undergoing a shift in terms of  destination, expected to support the positive growth outlook. Some of the significant changes are a decline in the share of Europe to less than 18 per cent (April-January 2013) from 21 per cent in 2006-07 and North America to 9.2 per cent during April-January 2013 from 11 per cent in 2006-07. The share of Africa increased to 17 per cent (April-January 2013) from 14 per cent in 2006-07; Latin America grew from three per cent to five per cent.

“The traction this year is definitely going to come from the newer markets. I think the target of 10 per cent is slightly aggressive. We feel exports this fiscal will increase within the range of three to five per cent and traction is going to come from the US and, to some extent, the Euro zone,” said Jyotinder Kaur, economist, Housing Development Finance Corporation. “The trade balance situation still looks grim but considering the narrowing of the gold and fuel import bill, we expect it to be around 10 per cent of the GDP.”

According to rating agency CRISIL, exports should recover slightly on account of the measures announced by the government last year under the Foreign Trade Policy, coupled with an improved global economic outlook.