"Exports likely to fall short by 20%" - ASSOCHAM

10 Nov '08

3 min read

Indian exports are likely to witness a shortfall of about 20% against their target of US$ 200 billion for 2008-09 as prevailing domestic economic conditions have caused a severe dampening effects on potential exports segments of Indian economy, says an analysis of the Associated Chambers of Commerce and Industry of India (ASSOCHAM).

The latest analysis of the ASSOCHAM on Realistic Exports Vs The Targeted One of US$ 200 Bln for 2008-09, adds that 7 key export segments such as textiles, apparels, gems & jewellery, diamonds, brassware, handicrafts and leather are already reeling under recessionary trends to sustain their past export buoyancy.

These put together constitute the highest export volumes in India's total exports from economies of scale such as America, EU and ASEAN. As a result of global slowdown especially in these economies, India's export market got reduced substantially and on the other hand, domestic pressures of prevailing economic conditions on textiles, diamonds, brassware, handicrafts, carpets etc. is too heavy.

Naturally, these sectors will not be able to generate their previous export momentum as a result of which the ASSOCHAM anticipates a minimum of US$ 40 billion exports shortfall for current fiscal. According to India's Foreign trade policy for current fiscal, the export targets fixed for 2008-09 are to an extent of US$ 200 billion.

In a statement issued here, ASSOCHAM spokesman said that its true that in the first couple of months of current fiscal, performance of merchandise exports which include grains, raw jute, petrochemicals has not been that bad but the fact is that the merchandise exports do not bring as much foreign exchange as are brought in by high value added products such as readymade garments, diamonds, jewellery, gems, carpets, handicrafts and brassware etc.

These exports are effected in markets of extremely higher value where other domestic exports are hardly penetrated and that is why, the ASSOCHAM is in general pessimistic on exports scenario especially towards markets of economies of scale.

Besides, slowdown syndrome the other reason as to why Indian exports would receive a drubbing in 2008-09 as ocean freight rates are also rising, rupee dollar exchange rate is weakening, recession not only in US and European markets is deepening and as a result, exports are subjected to certain restrictions.

The ASSOCHAM analysis, however, adds that exports that would have reasonably good prospects would improve pharma and chemicals, heavy engineering, metal and marine products, besides FMCG, as these sectors continue to command demand not only in domestic market but on export fronts too in economies of Middle East, Far East and African continent including SAARC region.

The other factors that have eroded costs and competitiveness of Indian exports including rising input costs which is not falling and secondly, power and infrastructure remain a problem for Indian manufacturing. India is still far behind on logistics as a result, the transaction cost of exports are rising and even reached around 20%, according to latest estimates.

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