Engineering exporters from Gujarat are exploring newer export destinations in Latin American and South-East Asian countries as conventional export destinations like US and Europe leave less business opportunity amid current gloomy economic condition.
Even as engineering exports accounts for the 21 per cent of country's total exports, the sector is reeling under the impact of economic slowdown in key markets. Industry insiders maintained that the orders from US and Europe are slowing down, prompting the industry to consider newer export destinations including Latin American and South-East Asian countries.
"Overall, global economy is in bad shape, but some of the emerging economies in Latin America are showing promising business potential. Orders have slowed from US and Europe, hence Indian exporters are exploring alternate export destinations," said Bratin Bhattacharya, senior deputy director, EEPC India during a promotional seminar for 'Indian Engineering Sourcing Show' to be organised in March 2012 by ministry of commerce and industry, government of India.
Gujarat has major engineering clusters located in Rajkot and Jamnagar districts in Saurashtra and several units around Ahmedabad. Most of the engineering exports is made by small and medium enterprises (SMEs) in the state.
"The scenario is not so good overseas, hence exporters are facing trouble. The engineering industry needs to focus more on domestic market for better business prospects," said a senior official of a leading engineering tools exporting company in Ahmedabad.
India's engineering exports recorded a fall of about 13 per cent year-on-year basis at US $ 7.16 billion during September 2011. However, during the period April to September 2011, engineering exports stood at about US $ 46.4 billion (approx. ' 245,000 crore) out of the total US $ 160 billion (approx. ' 847,000 crore).
Large players having more of domestic exposure in the engineering space find themselves comfortable with sufficient business prospects. "We are comfortable with our current order book and we expect about 15 per cent growth in the current financial year over last year," informed H C Shah, VP (commercial) and CFO, Elecon Engineering Ltd, a material handling equipment maker.
He added that exploring opportunities in domestic market with innovation in products would be a better option to sustain growth for engineering SMEs than exploring newer markets abroad.
According to EEPC India, engineering exports from the country is targeted to growth at a compounded annual growth rate (CAGR) of 27.8 per cent to reach at US $ 125 billion (approx. ' 662,000 crore) by 2013-14. In the current year, EEPC aims to record exports worth US $ 76 billion (approx. '402,000 crore).
