$300 bn export target difficult to meet: FIEO

With traders facing headwinds in crisis-ridden Europe and uncertain American market, India will find it difficult to achieve the $300 billion export target this fiscal, industry body FIEO said today.

"It will be a difficult period for Indian exporters," President of the Federation of Indian Export Organisations (FIEO) M Rafeeque Ahmed told reporters here.

He said sovereign debt crisis in the Eurozone poses a major challenge to the global trade, including Indian exporters.

Despite difficult conditions, the country's shipments grew by a handsome 26% in the April-December period this fiscal. Ahmed said the growth was also aided by increase in the commodity prices, including those of metals.

But with the cooling of these commodity prices, the export shipments may be affected in the value terms making it difficult to achieve the USD 300 billion target for 2011-12.

"We expect $280 billion in the current fiscal," he said.

Even in the next fiscal beginning April, the exports may grow at a lower rate of 12-15% taking the estimated shipments to $320 billion in 2012-13, he said.

The FIEO chief said if the situation does not improve, the three-year vision of reaching $500 billion would be a tough job. "For that, we should be growing at more than 29%," he said.

The US and the European markets account for about 26% of India's merchandise exports and any disruption in these destinations is bound to cause a dent in the overall shipments.

The outlook for 2012 does not seem to be better,either. The World Bank has revised downward growth estimates for global trade at 4.4%, while the IMF has pegged it near 4%.

"These are indications of moderating growth in our export, " Ahmed said.

During the April-December period this fiscal, exports aggregated to $217.6 billion, a year-on-year growth of 25.8%, thanks to good performance in the initial few months of fiscal 2011-12.

He said, Indian exports suffer a cost disadvantage against China as interest rates are high here. The Chinese exporters are able to get finance at a cheaper four%.

There could be some silver lining, as China too is facing increase in the manufacturing cost, the FIEO said. But it will be important for the Indian industry and trade to build big capacity to meet the global demand, he added.