Oil fuels FY13 exports but fails to arrest overall decline

Petroleum products remained the largest item in India's export basket during 2012-13, accounting for a fifth of outbound shipments and rising 7.7 per cent to $60.3 billion in 2012-13 from $56 billion the previous year, enabling the total exports to exceed $300 billion.

However, these items could not arrest a contraction of India's overall exports by 1.8 per cent, from $306 billion in 2011-12 as the country's largest trade partner, the European Union, crawled to recover from an economic downturn.

Last year, only six product categories accounted for an export realisation of over $10 billion each. Four of these recorded growth and the other two contracted in 2012-13 year-on-year, according to figures compiled by the Directorate General of Commercial Intelligence and Statistics (DGCIS).

Exports of drugs, pharmaceuticals and fine chemicals, facing rough weather in recent times, rose 10.5 per cent to $14.6 billion from $13.2 billion in 2011-12. This was almost five per cent of total exports. In the capital goods sector, machinery and instruments' exports went up six per cent to $15.2 billion from $14.3 billion the year before. Metal exports moved up five per cent, to $10 billion from $9.5 billion in 2011-12.

However, outbound shipments of transport equipment fell 14 per cent at $43.4 billion in 2012-13. High-value gems and jewellery exports also saw a contraction by over three per cent at $43.4 billion in 2012-13.

Ajay Sahai, director-general of the Federation of Indian Export Organisations, attributed the decline in India's exports to a fall in high-value items, gems and jewellery being one. These items, he says, show "a declining trend. They were exported in good numbers earlier". Among those fetching less than $10 bn, engineering goods rose 13 per cent to $347 million in 2012-13. Electronic goods, on the other hand, saw their export coming down nine per cent to $8 bn. Outbound shipments of computer software in physical form contracted 25 per cent to $386 mn. A significant laggard among traditional export items were textiles. Exports of cotton ready-made garments declined to $8.4 billion in 2012-13 from $9.6 billion the previous year, silk ready-mades to $238 million from $266.6 million and readymade wool fell to $296 million from $350 million.

"Textiles is one sector where we are not doing well when it comes to export of high-value products and so is the case with engineering goods. They were exported in good numbers earlier," Sahai said. Equally significant was the fall in iron ore exports, which declined 65 per cent to $1.6 billion in 2012-13 from $4.6 billion a year before, due to the court orders on ore mining.

"It is a conscious policy of the government to discourage the export of iron ore and, hence, the decline is not of much relevance to India now. It is time to look at value added products rather than iron ore. We should start exporting more iron and steel, rather than ore. Everybody has to move up the value chain," said Sahai.

Exports of semi-finished iron and steel declined moderately to $5 billion in 2012-13 against $5.2 billion the previous year.