‘Poor external demand, reduction of export incentives likely to affect exports’

Sai Nikesh | The Dollar Business

In view of the weak global demand, India’s exports in 2015-16, are likely to remain same or even move backward from $310 billion of 2014-15, says the Associated Chamber of Commerce & Industry (ASSOCHAM). The weak trend in exports that has been continuing since July 2014, remained the same since January 2015 right through April. The industry body said that the exports trend in the last quarter of fiscal 2014-15 and the first month of 2015-16 witnessed a decline unlike the usual trend where the last quarter of the fiscal turns out to be much better to make up for the previous quarters. Going by the official statistics, while the total exports value in the last quarter of 2014 remained at 76,750,679 ($ thousand), the value during the first quarter of 2015 stood at 69,863,559 ($ thousand) recording a decline over the previous quarter. Engineering products, petroleum products and gems & jewellery (G&J) products remained the biggest contributors to the overall exports basket during the last fiscal and the first quarter of 2015. While the engineering exports recorded a moderate rise from 3,402,728 ($ thousand) during Q4-2014 to 3,473,662 ($ thousand) during Q12015, the G&J products witnessed a slight fall from 10,128,596 ($ thousand) to 10,076,488 ($ thousand) and petroleum products recorded a sharp fall from 13,925,530 ($ thousand) to 7,951,633 ($ thousand). In this regard, the industry body says that the down-going trend for G&J segment is likely to continue in the current year, whereas, the petroleum segment is expected to witness some stable situation since after seeing a sharp fall, the crude oil prices have stopped seeing much of drop. Speaking to The Dollar Business, Suranjan Gupta, Addl. Executive Director, Engineering Export Promotion Council of India, said, “Coupled by two major factors- poor external demand and reduction of export incentives by Government of India in the new Foreign Trade Policy, the engineering exports are likely to witness a decline in the first half of the current year.” According to the ASSOCHAM, the merchandise exports are expected to average around $22-25 billion a month till the second quarter of the current fiscal and the shipments would also witness rise thereafter, however, the positive trend remains limited. However, the shortfall in exports may not have major impact on the trade balance since imports too would remain in muted form because of the poor consumption demand in the domestic Indian economy. Imports would remain between $440-450 billion in the current fiscal more or less in sync with the previous year during which the total imports value recorded $459 billion, it noted. Citing the weak global situation and noting that overall trade confidence is muted, the ASSOCHAM Secretary General, D S Rawat suggested the Government of India to improve on ease of doing business and reduce the transaction costs on Indian shipments.  

June 08, 2015 | 06:45 pm IST.