FY10 exports may dip on falling demand

India’s exports, projected to grow marginally in the twelve months ending March 2009, are expected to dip in the next financial year (2009-10) as rapidly deteriorating global economic situation is expected to adversely affect the demand for goods and services from the country, Commerce Secretary Gopal K Pillai said today.

Overseas sale of Indian goods have contracted for three consecutive months ending December 2008, while initial estimates available with the government have hinted at a drastic fall in overseas sale of Indian goods in January 2009 as well.

“It would be an achievement if we reach the $160-billion mark in 2009-2010,” Pillai said on the sidelines of an award function for Special Economic Zones.

Preliminary estimates available with the commerce ministry indicate a 22 per cent drop in exports during this January. The final export growth numbers will be released by the ministry on March 1.

Even with some correction in the final numbers, the dip in exports during January 2009 could be the highest since 1990 when the Reserve Bank of India (RBI) started recording export performance in its database. The sharpest export dip of 17.3 per cent in exports was recorded in May 1998.

Pillai further added that in 2008-09, the total exports from the country could be close to $170 billion. “Export growth may not cross even 5 per cent this fiscal,” he added. Total exports in 2007-08 stood at $162 billion.

Export growth has been dipping since October 2008, in the backdrop of the global economic crisis, especially in developed markets like the United States, European Union and Japan, which account for half of global output. The government has announced two fiscal stimulus packages since December last year, which included an interest rate subsidy of 2 per cent to export credit as well as enhanced export-related duty reimbursements.

Exporters have demanded more sops from the government, including income-tax benefits and higher interest rate subsidy, to maintain competitiveness in a shrinking overseas market.

“We are losing orders to our competitors by small margins. If the government addresses the concern raised by the exporters, we would be able to bridge the gap and get further orders,” said A Sakthivel, president of the Federation of Indian Export Organisations.