Exports likely to grow further on global demand, budget push

Global situation is conducive to exports as both advanced and emerging economies are showing better economic indicators, says FIEO President

Buoyed by the double digit growth in outbound shipments in June, exporters today said the momentum was likely to continue in the coming months on the back of higher demand helped by an uptick in global economies and measures announced in the Union Budget.

"The continuance of the double digit growth in exports is a very positive sign. With encouraging index of industrial production (IIP) numbers for May, I expect a further improved performance in months to come," Federation of Indian Exports Organisations (FIEO) President M Rafeeque Ahmed said.

Ahmed said the global situation is conducive to exports as both advanced and emerging economies are showing better economic indicators.

The budgetary announcements, including extension of 24x7 facility for all export promotion schemes, institutionalisation of Export Promotion Mission and greater involvement of the states will further facilitate exports besides reducing transaction cost and time, he said.

India's exports growth remained in double digit for the second month in a row in June at 10.22% but spurt in gold imports marginally pushed up the trade deficit to $11.76 billion.

"While the rise of over 9% in cumulative exports during the first quarter of 2013-14 reflects a steady improvement in global demand, we need to stay vigilant on trade deficit that has shot up to an 11-month high," Ficci President Sidharth Birla said.

However, credit rating agency ICRA said the growth in outbound shipments could moderate in the near future, while weak monsoon may prove to be a dampener by pulling down agricultural exports.

"Export growth is expected to be moderate in the coming months, reflecting external demand conditions, a waning of the favourable base effect and relative stability in the nominal exchange rate. The unfavourable monsoon conditions suggest agricultural exports would be muted in FY15," said Aditi Nayar, Senior Economist at ICRA Ltd.

Sectors that helped in pushing exports in June include textiles (14.39%), petroleum products (38.3%), engineering (21.57%), leather (15%), marine products (27.49%), oil seeds (44.4%) and tobacco (31%).

Engineering exporters' body EEPC India Chairman Anupam Shah attributed the rise in exports of engineering goods to uptick in the US economy.

"While engineering, petroleum goods and others have bounced back, the agri exports and shipments of electronics goods are causing concern requiring immediate support from the government," Assocham Secretary General D S Rawat said.

Exports in June stood at $26.47 billion as compared to $24.02 billion in the same month last year.