India’s exports, which had been growing at a compounded annual growth rate of about 20 per cent in the last few years, have dipped by 4-5 percentage points so far during this year. However, the Chairman and Managing Director of Export-Import Bank of India, T. C. A. Ranganathan, is unperturbed by this slowdown.
In an exclusive interview with Business Line, Ranganathan lays down a roadmap for growing the country’s exports during this crisis period.
India’s exports have shown a declining trend so far this year. Do you think the 20 per cent growth target is achievable this year?
There has been a decline in global import demand following the recent crisis and this has affected India’s exports. The dip is more pronounced in high-value exports such as processed petroleum.
The other key products which have witnessed a decline in exports include apparels, precious stones, electronic equipment, and iron and steel, to name a few. These products account for almost 60 per cent of the country’s total exports.
Exports, which were growing at a CAGR of over 20 per cent on a year-on-year basis for the last couple of years, has therefore seen a decline of about four percentage points so far during this year.
However exports of agricultural products, textiles, pharmaceuticals, and so on, have grown despite the lower global import demand. In fact, the export growth of some of these sectors has exceeded the target. Pharma, for instance, has grown by over 20 per cent, and the agricultural sector, by 38-40 per cent.
Given the current slowdown, do you think achieving the $500-billion export target for 2013-14 is possible?
Achieving the target, even if exports grow by 20 per cent over last year, looks slightly difficult now. The current growth figures for petroleum products, which hold one of the biggest shares in our exports basket, do not capture the growth in the sector in a uniform manner. Going by the figures available up to September 2012, the target looks challenging.
The situation is quite volatile and challenging. However, I would like to add that it is not a gloomy outlook. Indian exporters have, in fact, performed better than those in most other countries.
Do you think there is a need to revise this target?
A target is a number which you would like to achieve. I am not the right authority to talk on revision in targets.
A target is set to help achieve appropriate capacity expansion at ports and for putting in place other infrastructure. If a downward revision in target affects the process of capacity expansion, then it can be counter-productive for the growth in the sector.
What, according to you, should be done to boost exports?
There is a need to identify and undertake certain short- as well as medium-to-long-term measures to grow our exports.
In the short term there is a need to identify markets which have shown a positive demand growth in spite of decline in global demand.
At Exim Bank we provide support to exporters with appropriate advisory services for identification of potential markets.
In the medium-to-long term, there is a need to change thought processes. Exporters should look to adopt a cluster-based approach to help achieve economies of scale and reduce the unit cost of production. There is a need to create the right environment for attracting high-technology-based manufacturing industries.
How can the share of high-tech industries be increased in the exports basket?
There is a need to attract investments in technology sectors. Here the role of State governments comes in. Some States, like Maharashtra, Gujarat and Andhra Pradesh, are taking active interest and a fair amount of investments have started coming in.
What is Exim Bank doing to promote exports?
Exim Bank provides advisory service to exporters by identifying potential buyers and markets. Credit lines are given to overseas financial institutions, regional development banks and sovereign government to boost project exports from India.
We also provide other financing products such as suppliers’ and buyers’ credit.
This apart, we have also launched special schemes for financing research and development (R&D).
Though Indian investment in R&D has grown in the last few years, in percentage terms to balance-sheet its share is still low.