Engineering exports from India slumped 10 per cent in the first quarter of this fiscal, raising doubts in exporters’ circles on whether India could maintain last year’s growth rate.
The Engineering Exports Promotion Council (EEPC) agrees that this would be a challenging task, but feels that the amendments to the Foreign Trade Policy announced in June could prop up the falling exports. “It will be a daunting task and the government and the exporting community should work harder to revive the export situation,” Anupam Shah, EEPC senior vice-chairman, said.
The global economic slowdown has hit Indian engineering exports, which touched $ 14.6 billion in the first quarter, down from $ 16 billion during April-June 2011.
India’s engineering exports did bounce back to $ 40.7 billion in 2010-11, reflecting a healthy 50 per cent growth over 2009-10 ($ 32.4 billion). The growth story continued last fiscal, when the export turnover reached $ 60 billion with a 20 per cent growth rate.
The Commerce Ministry has fixed a national export target of $ 500 billion by 2013-14, out of which the share of engineering exports should be $ 100 billion.
“Although the recent policy amendments are welcome, we feel some further steps are required at this juncture to revive the exports,” Shah told Business Line.
“Our members have been complaining that they are not receiving their drawback claims in time. Now that DEPB no longer exists, most exporters rely on the drawback benefit, which in any case is much lower than what the DEPB rates used to be,” he points out.
High export credit costs, exchange rate fluctuations, bottlenecks at Indian ports and power shortage were some of the other obstacles facing the engineering exporters.
In many states, including Maharashtra, a continuing problem is refund of VAT, which is especially affecting the working capital needs of MSME units. “Unless the government and exporters work hand in hand, it will be difficult to meet the export targets,” Shah said.