Dip in engg goods exports leads to job losses

Even as the engineering goods sector, which has the largest share in the country's export basket, registered an export growth of 22 per cent (dollar terms) in the April-July period of this year, a recent study has revealed that the volume of exports has gone down in majority of the products manufactured by the sector, leading to job losses.

The study, conducted by the Engineering Export Promotion Council (EEPC) on 30 high and low value engineering companies, found that export growth in volume terms has decreased in 23 of 39 products, which were surveyed in the April-October period of this year.

However, it also concluded that the overall growth in export volumes in the sector during the same period stood at 44 per cent, as a result of robust performance in the rest 16 products.

According to the council, export growth seen in the sector is skewed and export volumes of majority of the products have dipped, compared with the previous year.

"Export growth seen in the sector is not real. The rise in exports on value terms is because cost of raw material has gone up. In the last three years, price of steel has gone up by 70 per cent. In the April-October period this year, the rise in steel prices was in the range of 15 to 20 per cent," said Engineering Export Promotion Council Chairman Rakesh Shah.

Engineering goods sector is crucial for export growth as it contributes 20 per cent to the export basket, making it a major driving force in the overall export growth.

Moreover, since the sectors' import intensity is lower than sectors like petroleum and gems and jewellery, it adds valuable foreign exchange to the economy as well.

The report comes at a time when export growth in sectors like textile, handicrafts and leather have dipped due to the appreciating rupee, leading to job losses.

The study also focused on the export orders and employment scene in the sector. As many as 44 companies, which were surveyed in this regard reported a loss of export orders worth Rs 64.11 crore in the April-October period.

In the same period, 2,868 jobs were lost, which has been attributed to the decline in export order. "This implied that a loss of Rs 1 crore in export orders leads to a loss of 44 workers being unemployed in the sector," the study concluded.

The worst-affected sectors in the engineering goods space has been identified as hand tools, castings and gorgings, auto parts, machine tools, diesel engines and generator sets, amongst others.