India’s exports face challenging times ahead: ASSOCHAM

The Dollar Business Bureau The Associated Chambers of Commerce & Industry of India (ASSOCHAM) has raised concerns over the decline in industrial production in October 2014 and has urged the government to develop new strategies to boost exports. According to India’s Ministry of Statistics, the General Index for October 2014 s is 4.2% lower y/y, with the Index of Industrial Production (IIP) for manufacturing showing a y/y decline of 7.6%. D.S. Rawat, Secretary General, ASSOCHAM said, “The 4.2% decline in industrial production in October 2014 has come as a shocker of sorts for us. While we were in a party mood over declining energy prices, little did we realise that the phenomenon was a clear signal of the demand dip in most of the large economies of the world, including China, Japan, and entire Europe.” This also points to tough times for exporters in the coming months. “Surely, our exports face a great challenge in the months ahead,” said Rawat. He said that the country requires some bold measures and confidence building which would spur implementation of projects and drive demand. Last month, the ASSOCHAM chief had said that India's exports may decline to around $310 billion in FY2014-15 due to the slowdown in exports in October and lower global demand. In comparison, India’s merchandise exports stood at around $314.4 billion in FY2013-14 and the government is targeting exports of around $340 billion in FY2014-15. Rawat also criticised the Reserve Bank of India’s Dr. Raghuram Rajan’s suggestion that the “Make in India” initiative should focus on “Making for India”. Last week, Dr. Rajan had said that India should not follow the export-led growth model of China. However, ASSOCHAM said that concentrating on the domestic demand through “Make For India” and not “Make in India” would amount to looking inward. Rawat said, “We must continue to reach out to the rest of the world braving the headwinds.” Rawat also suggested that the government should explore possibilities in revamping demand for Indian exports to suit the changing global conditions. “Even if the world demand is subdued, we cannot lower guard on exports….We need to re-strategise our exports in the changing world,” he said. ASSOCHAM has said that the euphoria about the formation of the new government is over and it is time the government deliberates over decline in manufacturing and exports and frames policies to tap into India’s demographic advantage. After a meeting with industry representatives today, ASSOCHAM hoped that the reforms such as GST and the new Foreign Trade Policy (FTP) will address some of the concerns faced by the exporters.      

This article was published on December 5, 2014.