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India's falling exports worry FIEO
22 Mar '16
3 min read
The Federation of Indian Export Organisations (FIEO) has expressed concern at the country’s falling exports.
In a press release, S C Ralhan, President, FIEO, said the 5.66 per cent decline in the trade data for February 2016, is largely on account of low export base in February, 2015 which itself was based on 15 per cent decline on year-on-year basis.
“Going by the current trend, we would touch $260 billion in 2015-16, a drop of about $50 billion in merchandise exports as compared to 2014-15. However, similar decline in imports which too was on a low base has helped us in reducing the trade deficit further but its effect on country’s manufacturing needs to be assessed through sectoral analysis of imports. The sharp decline in gold imports has helped in reducing the trade deficit,” he said.
Ralhan said exports will continue to face challenging times in 2016 and improvement is expected from the last quarter of 2016. He also said that exporters are already working on low margins and facing cut-throat competition besides huge volatility in currency.
The imposition of minimum import price (MIP) resulting in increase in steel prices by 15 per cent has further blunted the competitive edge of Indian engineering sector. While engineering exports have declined by about 16 per cent in first 11 months of the current fiscal, auto and auto components, cycle and cycle parts, hand tools, industrial and electrical machineries are the worst sufferers.
He said that the MIP imposed on 173 steel products covers roughly 80 per cent of steel imports and thus impact engineering sector hugely.
“Government needs to strike a balance between the interest of few large steel companies at the cost of thousands of micro, small and medium units which together provides more than 100 times of the jobs provided by large steel companies,” Ralhan said.
According to the FIEO chief, the imposition of MIP has resulted in anomalous situation as manufacturing units catering to both exports and domestic market may import at international price for exports while for domestic production at MIP from the same supplier and the huge differential in the two prices may subsequently land them in the net of investigating authorities.
Ralhan said that Government should provide steel to all export companies particularly in MSME sector at the international prices without compelling them to go through advance authorisation route which requires a minimum quantity of imports for economic viability and thus not suitable to their requirement. (SH)
In a press release, S C Ralhan, President, FIEO, said the 5.66 per cent decline in the trade data for February 2016, is largely on account of low export base in February, 2015 which itself was based on 15 per cent decline on year-on-year basis.
“Going by the current trend, we would touch $260 billion in 2015-16, a drop of about $50 billion in merchandise exports as compared to 2014-15. However, similar decline in imports which too was on a low base has helped us in reducing the trade deficit further but its effect on country’s manufacturing needs to be assessed through sectoral analysis of imports. The sharp decline in gold imports has helped in reducing the trade deficit,” he said.
Ralhan said exports will continue to face challenging times in 2016 and improvement is expected from the last quarter of 2016. He also said that exporters are already working on low margins and facing cut-throat competition besides huge volatility in currency.
The imposition of minimum import price (MIP) resulting in increase in steel prices by 15 per cent has further blunted the competitive edge of Indian engineering sector. While engineering exports have declined by about 16 per cent in first 11 months of the current fiscal, auto and auto components, cycle and cycle parts, hand tools, industrial and electrical machineries are the worst sufferers.
He said that the MIP imposed on 173 steel products covers roughly 80 per cent of steel imports and thus impact engineering sector hugely.
“Government needs to strike a balance between the interest of few large steel companies at the cost of thousands of micro, small and medium units which together provides more than 100 times of the jobs provided by large steel companies,” Ralhan said.
According to the FIEO chief, the imposition of MIP has resulted in anomalous situation as manufacturing units catering to both exports and domestic market may import at international price for exports while for domestic production at MIP from the same supplier and the huge differential in the two prices may subsequently land them in the net of investigating authorities.
Ralhan said that Government should provide steel to all export companies particularly in MSME sector at the international prices without compelling them to go through advance authorisation route which requires a minimum quantity of imports for economic viability and thus not suitable to their requirement. (SH)
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