Engineering exports growth turns negative since September

Arun S. New Delhi | Updated on March 12, 2018 Published on December 27, 2011


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Amidst the controversy surrounding the overstatement of engineering exports, it has emerged that the shipments from the sector have shrunk every month since September this fiscal over the corresponding period in the last financial year.

Provisional numbers sourced from the Engineering Export Promotion Council (EEPC India) indicated a trend of an ‘increasing negative growth', with engineering exports contracting by 0.92 per cent in September, then falling to -6.66 per cent in October and further to -38.43 per cent in November. (See table)

Interestingly, this comes after the exports from the sector had posted an impressive growth of 53.86 per cent in April, then bettering it in May with 72.22 per cent and further to an astonishing high of 107.23 per cent in July and following it up with 52.98 per cent in August.

Contraction in growth

Engineering export industry sources told Business Line that the sudden contraction in growth is mainly due to external factors such as the Euro zone crisis (Europe accounts for a quarter of the total engineering exports from India), and domestic situation including high cost of credit, credit squeeze and the consequent fall in industrial production. Another factor is the withdrawal of the major export sop – the Duty Entitlement Passbook Scheme (DEPB) – from September 30, they said. Engineering exports were a major beneficiary of the DEPB scheme.

Mr R. Maitra, Executive Director, EEPC India, said the engineering exports trend since September 2011 is extremely worrying. He added that the sector requires policy support in terms of lower credit costs and stability in the exchange rate for exporters to remain competitive in an extremely depressed international situation.

Citing the Commerce Ministry statement on December 9, EEPC India said engineering exports for April-November 2011 is estimated at $40.7 billion out of the total exports of $192.7 billion. “This implies a share of 21.12 per cent of India's total exports. Also engineering exports grew by 22.21 per cent from $33.3 billion in April-November 2010 to $40.7 billion in April-November 2011,” it said, adding that though there is a positive growth when one takes this financial year's cumulative numbers into account, there is a contraction on a month-on-month basis.

Inflated numbers

Earlier this month, the Commerce Secretary, Dr Rahul Khullar, had said that software problems and data entry errors resulted in the country's total export numbers being inflated by around $9 billion for April-October this fiscal. In this $9 billion, he had explained, there was an over-estimation of engineering exports by $15 billion.

April-October numbers showed that engineering exports recorded 80 per cent growth, whereas in November, when the actual numbers (April-November) came in, it is down to a modest 22-23 per cent, he had said. Besides, Dr Khullar had said that there was an under-estimation of petroleum and gems and jewellery exports by $12 billion, adding that there were minor data errors in other 500-odd categories.


Published on December 27, 2011
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