Lower exports growth likely in FY06

Despite registering a growth rate of over 20 per cent so far in the current fiscal, export growth in India is expected to be lower in 2005-06 compared with the previous year, according to an assessment made by the economic division of the commerce ministry.

"World trade growth was expected to decelerate some what during 2005 compared with 2004, with the moderation of the world output growth. In line with this, the export growth in India was expected to be lower in 2005-06, compared with the previous year," it said in its "Macro-Economic Overview 2004-05".

Exports touched $ 79.2 billion during 2004-05, registering a growth of 24 per cent. Besides, a target of $ 92 billion was fixed for the current fiscal with an implicit growth rate of 16 per cent. About the sectoral growth prospects, it said India's information technology services market was projected to grow by 22.7 per cent this year, compared with China's 11.8 per cent.

"The growing competitiveness of the Indian information technology (IT) industry was attributed to the liberalisation of telecommunication, the resultant sharp fall in prices and the low cost manpower skills, with the overall salary of a fresh IT sector employee being just 15 per cent of that of the United States," it said.

India's pharmaceutical exports worth about $ 2.5 billion in 2003 was expected to reach $ 6.5 billion by 2010, it said, adding, the cost in India for scientists, doctors and laboratory analysts was estimated to be about one-fifth to one-eighth of those in the US. Referring to the aviation sector, it said with the arrival of low-cost Air Deccan carrier, the air fares had been declining.

"Low cost pricing was expected to change the Indian aviation sector as many more people would be introduced to air travel," it said.

In the four biggest markets of Mumbai, Delhi, Chennai and Bangalore, air traffic grew between 17 to 34 per cent during 2002-03," it said.

It noted the growing synergies between services and manufacturing had made India specialise in skill intensive products instead of mass produced products, which was a speciality of China.

"According to one recent estimate, 50-60 per cent of all industrial output was based on information," it said, adding, one of the reasons for the growing competitiveness of industries like pharmaceuticals and engineering products like auto parts was the innovative use of information technology and research.