But govt says ‘it is not going to be an easy summer’ for exporters
The current financial year (2011-12) began well for the country’s exports which grew by an impressive 34.4 per cent annually in April at $23.9 billion. Imports reached $32.8 billion, up 14.1 per cent compared to the same month a year ago.
However, exporters have said while exports are growing in value terms, the high cost of credit is eroding their margins. In April, the balance of trade — the difference between a country’s exports and its imports — in April stood at $ (-) 8.9 billion, according to the initial estimated released by Commerce Secretary Rahul Khullar here today. The figures could be revised once the official data gets released on June 1.
“I expect 2011 will be good despite slowdown in Europe and the US but it is not going to be an easy summer,” Khullar said adding that exports might end up with a growth rate of 20-25 per cent in the present financial year. He, however, said uncertainties in the global economy were not over yet.
“There is constantly a fear of the unknown and a domino effect is likely in Europe. Until some clarity emerges on that front there will be uncertainties in the business sentiments and consumer sentiments which might affect the exports,” Khullar added.
Exporters, on the other hand, have expressed concern with the unabated rise in interest rates, which is making their products uncompetitive compared to other countries. They have also urged the government to extend the duty entitlement passbook scheme (DEPB) to sustain such high level of growth. The scheme is scheduled to expire on June 30.
“We fully support the government’s efforts to curb inflation, but there should be a distinction between export finance and domestic finance. If Indian exporters get credit at 10.5-11 per cent, they will be totally outpriced in global markets. Also, the uncertainty about continuance of the DEPB scheme coming on the heel of withdrawal of interest subvention scheme for exports has defused the enthusiasm of the exporters,” said Ramu S Deora, president, Federation of Indian Export Organisations.
During April, the sectors that did well in export are engineering that grew 109 per cent, gems and jewellery 39 per cent, electronic goods 48 per cent, petroleum products 53 per cent, plastics and linoleum 30 per cent. In imports, petroleum products grew 7.7 per cent, pearls and precious stones increased 19 per cent and gold 60 per cent.
“Composition of exports has shifted from labour-intensive; traditional items to capital-intensive manufactured items as well as petro products. This is reflective of supportive policy, growing demand, and a build-up in refining capacity,” said Rohini Malkani, economist, Citigroup India.
Destination markets have seen a shift, with the US and EU seeing a declining share and West Asia and rest of Asia now comprising a growing share of total exports. Share of the US and EU has come down to 11.8 per cent and 22.2 per cent in 2009-10 from 24.4 per cent and 27.9 per cent in 1999-2000 respectively, while that of West Asia has grown to 22.4 per cent in 2009-10 from 12 per cent in 1999-2000. Share of Asean countries also increased from 6.1 per cent in 1999-2000 to 10.3 per cent in 2009-10, according to a research by Citigroup.
In the last financial year, merchandise exports ended up at $246 billion growing by 37.55 per cent compared to 2009-10, while imports topped $350 billion in 2010-11, up by 21.6 per cent over the previous year. The trade deficit in 2010-11 stood at $104 billion.
