Decline in India’s exports is alarming: FIEO

There is a need to analyse and find the reasons before it is too late, says FIEO President The Dollar Business Bureau | @TheDollarBiz

Softening commodity prices and an uneven global recovery hurt India's exports in October 2014

The Federation of Indian Export Organisations (FIEO) has expressed disappointment over the decline in India’s October 2014 merchandise exports and has urged the government to analyse the reasons to prevent a slide. According to the Ministry of Commerce, India’s exports (merchandise) declined to the lowest since April 2014 to around $26 billion in October 2014. This is down about 10% from $28.9 billion in September 2014, and down about 5% from around $27.5 billion recorded in October 2013.

India-exports - Oct 2014-TheDollarbusiness12

Cumulative exports in April – October 2014 stands at around $189.8 billion, up 4.72% from $181.2 billion in the corresponding period last year (Source - Ministry of Commerce, India)

Indian exports had seen strong growth in May and June this year, hitting the double-digit growth rate for two consecutive months and prompting exporters to eye a total of $350 billion worth exports in FY2014-15. However, exports have moderated in the following months and slumped in October 2014 partly due to slowdown in export markets such as Europe and a drop in oil and other commodity prices. In its latest forecast, the World Trade Organisation (WTO) slashed its forecast for global trade from 4.7% to 3.1% due the uneven recovery. Moreover, India’s petroleum exports are down due to softening of global crude oil prices. India’s exports to Iran have also declined due to lifting of sanctions by western powers. However, the sharp dip seen in exports in October was unexpected. M Rafeeque Ahmed, President, FIEO, said, “While we were conscious of challenges in emerging global scenario, we expected at-least modest growth of single digit.” What is worrying is that exports in important sectors fared badly last month. According to FIEO, exports in leading sectors such as Engineering (- 9%), Drugs and Pharmaceuticals (- 8%), Gems and jewellery (- 2%), Cotton and Man-Made Yarn (-14%), Carpets (-2%), Petroleum (-0.16%), and Plastics (-17) all joined the negative list in October 2014. Export growth also moderated in Leather (3%), Apparels (0.7%) and Marine (6%) sectors, all of which had registered strong growth in last few months. “This is an alarming situation which needs to be analysed and addressed quickly before it is too late,” said the FIEO chief. He has urged the government to re-introduce interest subvention on exports with effect from April 2014, especially for MSME exporters. He also said that the new Foreign Trade Policy (FTP) must be announced soon or the previous one allowed to continue until March 31, 2015, to remove ambiguity among exporters. The new FTP should focus on Marketing, Branding, e-Commerce, Services exports, Project exports, High technology exports and improve the ease of doing business, M Rafeeque Ahmed said.

This article was published on November 19, 2014.

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The Dollar Business Bureau - Nov 19, 2014 06:42 IST

Decline in India’s exports is alarming: FIEO

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