If 2011 was a difficult period for Indian exports, 2012-13 would be worse. Exports had a healthy run in the first half of 2011-2012, while growth rates had been steadily falling since August. However, exporters are set to begin the new financial year with growth rates that are already grim, and down to single digits.
According to analysts and economists, while exports are facing severe shortage of demand in developed countries, even new markets would fail to ease the burden, as these also depend heavily on exports to Europe and the US.
The order books for the summer of 2012 have already seen drops of 20-30 per cent, and exporters are not very hopeful of orders in the spring or winter as well. “The big stores and outlets in Europe are all asking for a discount. The situation is very grim, as the supply is more and demand is shrinking by the day. Compared to 2011 summer orders, this year these are almost 30 per cent down,” said M Rafeeque Ahmed, president, Federation of Indian Export Organisations (FIEO) and chairman, Farida Group, a leading leather exporting firm.
Commerce secretary Rahul Khullar had recently said 2012-13 would be harder for exporters, as a solution to the euro zone crisis was still uncertain, and recovery in the US was sluggish. Looking at the government’s fiscal condition, it might not be able to dole out incentives for exporters, unlike previous years, he had said.
“The first couple of quarters of 2011-2012 had been very robust, but things have come to a standstill since then. We have no hopes of doing better, even in the upcoming financial year, which is already starting on a very poor note. It is not easy to go to new markets at this juncture. There is a fear factor among exporters, owing to the high volatility in exchange rates,” said R Maitra, executive director, Engineering Exports Promotion Council.
Engineering exports had seen a robust performance in recent years. In 2010-11, engineering exports reached $60 billion. According to Maitra, engineering exports would not exceed $60 billion this financial year. He said one of India’s primary markets was Germany, and exports were not faring well even there. About 40 per cent of India’s engineering exports are me-ant for the European and American markets.
However, experts do not foresee exports going into negative territory, a scenario in which revenue would be lower than that seen in 2011-12, though growth rates are expected to be tepid. “I do not foresee a negative rate of growth for exports, but surely, there would be reduced levels of growth. The EU is in a bad shape, and so is the US. Things are not that bright in the Asean countries as well. Lifestyle products such as gems and jewellery and handicrafts would take a major beating in 2012. But we might not see a reduction in absolute exports,” said K T Chacko, director, Indian Institute of Foreign Trade.
Exporters had demanded the extension of interest subvention to other sectors in the Budget for 2012-2013. In a pre-budget meeting with finance minister Pranab Mukherjee, FIEO had said exports should be included in priority sector lending.