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New markets on horizon, India too offers a reason

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Rituparna BhuyanSapna Dogra Singh New Delhi

At a time when orders from overseas clients are drying up, Indian exporters are ensuring that production in their factories does not come to a halt. They are doing so by exploring new markets as well as seeking opportunities in the domestic market.

Indian exports have contracted for four consecutive months, ending January 2009.

Buyer-seller meetings are being organised across the country at a much higher frequency in an attempt to boost interaction between exporters and potential international clients. “We have organised six such meetings in major cities across India since January this year. From initial inputs, it seems that about $500 million worth of orders will be generated from these meetings. More such meetings are on the anvil,” said R Maitra, executive director, Engineering Export Promotion Council, exporters from which account for one-fifth of India’s exports.

 

To explore new markets, delegations of engineering goods exporters will be fanning out in Japan, Russia, Chile and Mexico in the coming months. This comes in the backdrop of forecasts that expansion of exports from the sector in 2008-09 will only be half of the near 30 per cent growth seen in the previous year.

“There are opportunities in existing markets like Europe as well. We can offer machinery at 15 per cent lower cost than what is being produced by reputed companies in Germany. Factories in Europe will be looking at cost-cutting options and we want to leverage that,” adds Maitra.

Textile exporters, one of the hardest hit because of the current slowdown, are also trying to do their bit to ensure that factories do not shut down. “We are following a five-day week, instead of six. We are also taking the help of information technology processes to manage raw material and their usage. Wastage is being minimised,” said A Sakthivel, managing director of Poppy’s Knitwear based in the textile town of Tirupur in Tamil Nadu.

“Orders have come down by up to 15 per cent compared with last year. But no factory has shut down,” added Sakthivel, who is also the president of the Federation of Indian Export Organisations (FIEO).

Trade experts maintain that exporters are also looking at domestic markets. “If orders are not coming from abroad, people do not want to stop production. So options like supplying to domestic markets are being explored actively,” said Ajay Sahai, director general of FIEO.

One such exporter is Satish Wagh, managing director of Mumbai-based Supriya Lifesciences Ltd. Wagh has seen an opportunity in the high cost of Chinese chemical product imports.

“Chinese were virtually dominant in almost all sectors in the basic chemicals and pharmaceutical space. But they increased prices three-fold post-Beijing Olympics in August 2008,” he said.

Today, 20 per cent of generic drugs produced by Supriya Lifesciences go to the domestic market, compared with near about 5 per cent last year. “There is an opportunity and we are trying to tap that at a time when overseas orders are down. Exploring new markets is an option for the sector. But regulatory process in new markets means that it will take time for products to enter,” added Wagh.

Ready-made garment exporters like the Mumbai-based Creative Group also have increased their domestic supply. As much as one-fifth of the company’s Rs 300-crore turnover now comes from the domestic market, up from just 5 per cent a few years ago. “We are planning to increase this further, seeing the crisis the overseas markets are going through,” said Rahul Mehta, managing director of Creative Group.

Rakesh Shah of Kolkata-based Nipha Enterprises, a manufacturer of agricultural equipment, also maintain that the show must go on. “We are taking orders, even if they take care of a part of our fixed costs. This is because if operations are shut, the cost of restarting them is much higher. No exporter can afford a shutdown,” he added.

While Shah had clients in emerging markets like Africa, he is now trying to gain additional orders from the Commonwealth of Independent States, a bloc of former USSR republics.

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First Published: Mar 10 2009 | 12:13 AM IST

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