Steel price rise distorts export figures

Engineering sector exporters have been hit hard by the appreciating rupee.

Industry insiders suggest that the real impact of rupee appreciation is visible in the disaggregated figures of growth in terms of volume not in terms of value.

According to a recent survey of the Engineering Export Promotion Council (EEPC), exports growth in volume terms averaged a negative growth of 0.58 percent during April-October 2007.

Rakesh Shah, chairman of EEPC, said, "The figures are bad compared to last year and we believe that the sector must grow by 30 per cent year-on-year."Shah attributed the growth of exports on dollar terms to the increased price of steel.

"Worldwide the price of steel has increased and thereby the cost, and hence subsequently it reflected in higher selling price. So the overall realisation in terms of value has increased as we are getting more price for the same amount of export," he explained.

Distribution of volume growth in engineering exports was skewed and majority of exports in volume terms declined in the period.

EEPC carried out the survey in the first week of December 2007 after reports that engineering exports had risen 26.7 per cent in US dollar terms and about 12.8 percent in rupee terms during the period between April-October 2007.

Around 50 Companies responded and reported the volume growth figures for 71 products as some companies manufactured and exported more than one product.

Of the 71 products, 43 products reported negative volume growth in excess of 10 percent for all items except four products. The balance 28 export products recorded positive volume growth.

Also, four export products recorded less than 10 per cent volume growth while the remaining 24 products recorded high volume growth.

In other words, 60 per cent of exported engineering products from 50 companies surveyed recorded negative volume growth while 33 per cent of exported items recorded high volume growth and the balance 5 per cent recorded positive but less than 10 per cent volume growth.

If un-weighted average of volume growth was done on the basis of 69 commodities, engineering exports volume growth averaged negative growth of 0.58 per cent during April-October 2007, said the study.

However, the un-weighted average excluded two products showing unusually high growth that affected the average considerably.