46% Exporters See Better Times Ahead

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

A break up shows that of the 46% of exporters who have experienced a turnaround in exports, around 65 percent have seen their overseas sales growing between 1-20 per cent while 35 per cent have even seen an 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 countries like Nepal and Bangladesh have shown a rise in market share .In fact, companies have increased their market share among existing trading partners as well as forayed into new markets, according to Mr. Satish Bagrodia, President, PHD Chamber.

Still a decisive 54% of exporters still complain of weak external demand conditions which create an unfavourable environment for exports. According to these exporting units, the two most pressing problems relate 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 to slow revival of demand in countries like USA, Europe, Middle East, CIS and South East Asian countries.

What is also significantly hurting several companies are lower prices charged by competitor countries. The huge Government support given by countries like China to their exporting units-and an undervalued yuan in the case of China is causing these countries to quote extremely low prices and is emerging as a main obstacle for Indian companies in converting export enquiries into orders, added Mr. Bagrodia.

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

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

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

Some suggestions to improve the exports as suggested by PHD Chamber are to ensure easy credit availability to industry, particularly the SME sector at cost effective rates, effect easing and simplification 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, exempt exporters from payment of service tax, refund CST paid on inputs used by all exporting units as is given to 100% Export oriented units (EOU), full requirement of coal needed by manufacturer exporters be supplied at notified rate, ensure faster clearance of import & export cargoes, benefit available to exporters, accruing from the stimulus package, should continue and be disbursed.

Government organizations should be asked to explore new markets for Indian products.Special exhibition should be organized by EPC, FIEO etc for made in India products.

The immediate focus of the Government should be to provide incentives to enhance the competitiveness of exports in the global arena. Industry hopes that expansionary monetary policy should continue and fiscal incentives should be retained to revive demand and increase private consumption expenditure. Besides, infrastructure bottlenecks need to be addressed and skill development initiatives should be taken on a priority basis. This would provide a fillip to the exporters, further added Mr. Bagrodia.

Originally published in The Stitch Times: March 2010