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As the Greece debt crisis is deepening, the engineering goods exporters from India are bracing up to draw a contingency plan to meet the anticipated fall in exports.
“The financial turmoil in Greece could also hit the trade partners in European Union which is one of the largest importers of engineering goods from India. China has excess capacities and huge stocks (approximately 300 million tonnes) of steel. So it may more aggressively export to European Union at a competitive price. This is really worrying us”, said Anupam Shah, Chairman, Engineering Exports Promotion Council.
The industry is now contemplating to penetrate deeper in the markets of ASEAN countries, Australia and New Zealand. These countries account for a less than 10% exports but have potential for higher exports, he added.
The industry was looking at a growth of 15% over the last year but in the current situation we may not be able to meet even the last year’s target, said Shah.
| Year | Exports to EU | Exports to North America | Exports to ASEAN+2 |
| 2013-14 | 11.2 | 8 | 7.94 |
| 2014-15 | 12.2 | 10.3 | 8.74 |
| Exports in US billion $, ASEAN+2 are ASEAN, Australia and New Zealand. | |||
| Source: Engineering Exports promotion Council. | |||
The exports of engineering goods registered an up tick in the last two years and the industry was geared up to registered higher exports this year.
According to S C Ralhan, President FIEO (Federation of Indian Exporters Organization: “The exporters will be effected in both the situations, whether Greece is bailed out or not. Europe is already under recession. Until there is stability in Europe markets will not improve. If Greece quits the European Union or it settles for a bailout package, it will create uncertain economic situation. After registering a double digit growth in past two years, the April and May of 2015 clocked decline in business. The fluctuation in the exchange rate also prompted some of the entrepreneurs in Europe to kick start the manufacturing as imports for them are becoming more expensive. The exports to EU may plunge by 20% in the present situation.”
Post 2008 global financial meltdown, there was a sudden increase in demand from developed world and Indian manufacurers made substantial investment,ents in plant and machinery to ramp up their capacities, told Ralhan.
He added that exporters may not find any immediate alternatives as Russia is in deep crisis, Latin America is facing the scarcity of dollars due to sharp decline in crude oil prices and there have been issues with Reserve bank of India for the mode of payment with the middle East countries.
Only a few weeks back, the Government of India revised the import duty on steel from 7.5% to 10% (on long products) and 10% to 12% (on flat products) to bailout the domestic steel players.
The interest subvention scheme that was announced in foreign trade policy for this sector is also pending for approval with the Cabinet Committee on Economic Affairs. The undue delay in the implementation is undermining the competitiveness of the exporters in the global market, said Anupam Shah.
For April-May this year, engineering exports to EU stood at $1.86 billion, as against $1.89 billion in the year-ago period.
As per the annual survey of Industry, the engineering goods industry in India is of the size of Rs 2.8 lakh crore, which is approximately 33% of the total industry size and generates an employment of about 39.18 lakh in the organised sector.
