The Hindu Business Line : Export outlook not bright, says Survey

New Delhi, Feb. 28 The outlook for exports in 2008-09 could be duller than that of the past few years, predicts the Economic Survey 2007-08. Lower projections in world gross domestic product (GDP) and world imports and exchange rate developments were the concerns cited.

The Survey, taking note in particular of the fall in export growth to the US, particularly in textile exports to the US and the EU, and has called for fundamental policy changes. The remedies it suggested for the merchandise sector included continuation of reduction in customs duty, weeding out unnecessary custom duty exemptions and checking the proliferation of SEZs.

Growth drivers

During the nine months of April-December, only 70 per cent, or a little more than two-thirds of the export target was achieved, reaching a level of $111 billion, notes the Survey. The major growth drivers were petroleum products, engineering goods and gems and jewellery. There was a revival of the gems and jewellery sector with export growth of 20.4 per cent for April-September 2007, after a deceleration in 2006-2007. Growth of engineering exports was sustained by machinery and equipment, transport equipment and manufacturers of metals.

China, the second largest trade partner since 2006-07 with its share increasing by 5.2 percentage points over the decade, saw its share during April-October 2007 beating that of the US, India’s the largest trade partner, by Rs 600 crore.

Strong rupee

The survey also takes note of the measures taken to provide relief to exporters affected by the rupee’s appreciation. The rupee appreciated against other major currencies for most parts of the year, albeit modestly compared to its rise against the US dollar.

The Survey says some sectors with low import intensity were affected, forcing the Government to enhance by three per cent the Duty Entitlement Pass Book (DEPB) rates for nine sectors. These included textiles (including handloom), readymade garments, leather products, handicrafts, engineering products, processed agricultural products, marine products, sports goods and toys.

The DEPB rates were enhanced by 2 per cent for other sectors.

Interest subvention of two per cent for pre-shipment and post-shipment credit for the nine sectors and all exporters from the SME sector was further extended from December 31, 2007, to March 31, 2008.

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