<b>Sunil Jain:</b> Export those woes

With exports, including those of the services sector, comprising about 23 per cent of GDP, you'd think the slowing of exports would hit India Inc pretty badly as well. This, however, is not necessarily true. At an aggregate level, data from CMIE show, the value of exports to sales for India Inc is around 16 per cent — so, the bulk of demand for India’s corporate sector is local. India Inc’s greater degree of internationalisation, however, is to be seen in its raw material and capital goods purchases. Over 45 per cent of raw materials used are imported (the figure is as high as 75 per cent for polymers and petroleum products), up from 30 per cent at the turn of the century — in a commodity cycle that's turning downwards, this means there are substantial savings to be made.

In the case of capital goods, the import-dependency is as high as a fourth (it is nearly 100 per cent for transport services, 55 per cent for automobiles and telecom and 45 per cent for industrial machinery), and the impact of softening international prices will also be beneficial. A final view of the impact of slowing exports on India Inc will have to take into account the loss in profits from export versus the gains to be made from softening commodity and other prices.