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G. Srinivasan

New Delhi, July 6The Commerce Ministry is concerned over the decline in the export growth of traditional sectors such as textiles, leather, marine products and gem and jewellery in the initial two months of the current fiscal, in view of its impact on employment associated with these industries.

Disclosing this to Business Line , the Commerce Secretary Mr Gopal K. Pillai said “any decline in these sectors meant per job lost is more and that is why we are now trying to see what could be done to bolster them. We are in discussion with industry to ascertain the real cause for this decline.”

One compensating factor is the depreciation of the rupee which gives exporters more return now than in the past when rupee was appreciating continuously in 2007. Even as interest rate has gone up, export credit at seven per cent for the time being due to interest subvention measures has also come handy to these industries, he added.

Mr Pillai said part of the decline in export was due to lower demand in the US and to some extent for textiles in Europe. Hence, “we must shift the focus on some other markets where we can kick start demand in those countries in terms of providing support to Indian exporters”.

He said the slowdown elsewhere need not affect Indian export industry if there is some significant domestic investment.

He said $70-80 billion investment in infrastructure must take place and if there is any slowdown in such outlays, this would affect everything including exports. Stating that interest rate increase has a bearing on investment, Mr Pillai noted that as home loan cost has gone up it has curtailed housing activity which has a spill-over effect on cement, steel and other intermediate goods.

However, he said, there is some compensation since construction activities in the special economic zones (SEZs) have boomed. 200 IT SEZs meant 200 million sq ft of built-up space, he said.

This is despite the Reserve Bank saying that SEZs need to be treated on par with real estate for lending purposes by banks, he added.

Mr Pillai said he is not concerned over export target of $200 billion per se being met for the current fiscal, as price factors alone could ensure higher export receipts.

He cited the cases of petroleum products and engineering goods exports where because of high price of crude and steel, the value-added exports would fetch higher returns.

He expects petroleum product export receipt alone to go up by $15-20 billion this fiscal on top of $30.56 billion that the country compassed in 2007-08 on the export of this item.

On the recent ban on maize exports after non-basmati rice export and call for cotton export ban being in the air, the Commerce Secretary said, “we are not in favour of any ban at all” on any export item and our stance is that “if price goes high, export and import and maintain the balance”.

He said on cotton, international price is lower than domestic price and the import duty is only 10 per cent. He stated the country exported 65 lakh bales of cotton in 2007-08 and the needs of export market must be met to get counted as a credible supplier.

Referring to the Goa SEZ imbroglio, Mr Pillai said the State Government would discuss the issue with developers.

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