46% Exporters See Better Times Ahead

Exporters see better times ahead as 46per cent of respondents in a survey have cited a rise in orders as compared tothe last three months and actual shipments have gone up. This was the findingsof a recent survey done by PHD Chamber which had 200 respondents.Indianexporters are of the opinion that the recent recovery in the global economy isworking its way to have a positive impact on exports. As a result, exportvolumes of many units have gone up and international buyers are once againshowing interest in Indian products.


A break up shows that of the 46% of exporterswho have experienced a turnaround in exports, around 65 percent have seen theiroverseas sales growing between 1-20 per cent while 35 per cent have even seenan impressive growth of 21-50 per cent. Exports to countries such as USA, UK,Spain, Turkey, UAE, Republic of Korea, Russia, and even South Asian countrieslike Nepal and Bangladesh have shown a rise in market share .In fact, companieshave increased their market share among existing trading partners as well asforayed into new markets, according to Mr. Satish Bagrodia, President, PHDChamber.


Still a decisive 54% of exporters still complainof weak external demand conditions which create an unfavourable environment forexports. According to these exporting units, the two most pressing problemsrelate to the lack of overseas demand and low prices charged by competitor countries.In fact, these exporters find that their order books are in bad shape owing toslow revival of demand in countries like USA, Europe, Middle East, CIS andSouth East Asian countries.


What is also significantly hurting severalcompanies are lower prices charged by competitor countries. The huge Governmentsupport given by countries like China to their exporting units-and anundervalued yuan in the case of China is causing these countries to quoteextremely low prices and is emerging as a main obstacle for Indian companies inconverting export enquiries into orders, added Mr. Bagrodia.


Similarly, around 42 per cent are impacted bydumping of goods by the foreign supplier such as China and CIS countries evenwhile a large majority, 58 per cent do not perceive this to be a major problem.


According to the survey, not too many exportersfeel that the Foreign Trade Policy announced this year would help reverse theirfortunes. A majority, around 61 per cent mentioned that policy would not helpthem affect a turnaround in exports. However, a sizeable number, around 38 percent, were positive about the impact.


Exporters find that many of their demands, whichwould have helped mitigate the impact of slowdown, have not been met. Theproblems relate to high cost of export credit and un-rebated state taxes andduties which raise the transactions costs of exports.

Some suggestions to improve the exports assuggested by PHD Chamber are to ensure easy credit availability to industry,particularly the SME sector at cost effective rates, effect easing andsimplification of procedures, including lengthy paper work to reduce costs,restore drawback rates to the level existing earlier, increase DEPB rate,assure exporters full reimbursement of duties and state/local taxes, exemptexporters from payment of service tax, refund CST paid on inputs used by allexporting units as is given to 100% Export oriented units (EOU), fullrequirement of coal needed by manufacturer exporters be supplied at notifiedrate, ensure faster clearance of import & export cargoes, benefit availableto exporters, accruing from the stimulus package, should continue and bedisbursed.


Government organizations should be asked toexplore new markets for Indian products.Special exhibition should be organizedby EPC, FIEO etc for made in India products.


The immediate focus of the Government should beto provide incentives to enhance the competitiveness of exports in the globalarena. Industry hopes that expansionary monetary policy should continue andfiscal incentives should be retained to revive demand and increase privateconsumption expenditure. Besides, infrastructure bottlenecks need to beaddressed and skill development initiatives should be taken on a prioritybasis. This would provide a fillip to the exporters, further added Mr.Bagrodia.


Originally published in The Stitch Times: March 2010