In his 2014-15 interim Budget speech, Finance Minister P Chidambaram had pegged merchandise exports for 2013-14 at $326 billion, 6.3 per cent more compared to 2012-13. In the April 2013-January 2014 period, overall exports stood at $257 billion, against $243 billion in the year-ago period. This means to meet Chidambaram’s estimate for this financial year, India will have to export about $69 billion worth of goods in February and March.
During its previous review of the Foreign Trade Policy (FTP) 2009-2014, the commerce ministry had set the exports target for 2013-14 at $325 billion.
Experts say exports might be lower than this target set by the commerce ministry, as well as the finance minister’s estimate. “While we will exceed last year’s exports, it will be difficult to reach $326 billion. Undoubtedly, we will achieve growth over last year but might fall short of achieving the target set during the last review of the FTP,” said Ajit Ranade, chief economist, Aditya Birla Group. He said at the beginning of this financial year, the target looked achievable, owing to a fall in the rupee and the fact that agricultural exports were high. “But now, growth rates have slowed, mainly due to a problematic situation in destination markets such as Japan, China and Europe.”
Recently, Commerce Secretary Rajeev Kher said achieving the target of $325 billion would be a “tough call, but we will achieve it”. On
February 20, Kher had convened a meeting with all leading exporters and urged them to push exports so that at the least, the FTP target of $325 billion would be met.
Now, the Federation of Indian Export Organisations (FIEO), which had earlier said India might record $350 billion worth of exports this financial year, sounds apprehensive. It said overall exports in 2013-14 might stand at $318-320 billion. Ajay Sahai, chief executive and director-general of FIEO, said the government’s recent move to subsidise sugar exports might add $3-4 billion to total exports. “With the latest move on sugar exports, we might go close to the target, though reaching the target seems slightly difficult now,” Sahai said. To achieve their targets, exporting firms might push exports in March, he said, adding total exports during that month might stand at $30-32 billion.
“The target is too ambitious. Though March usually sees an uptick, the matter has worsened because of the fall in petroleum exports. Also, gems and jewellery exports have not done well. So, it is going to be difficult (to achieve the export target),” said Anis Chakravarty, senior director, Deloitte.
While overall exports had increased 1.7 per cent in April 2013, it declined 1.1 per cent and 4.6 per cent in May and June, respectively. However, in the July-October period, exports registered double-digit growth, primarily due to the rupee’s fall against the dollar. During April-December 2013, the rupee’s monthly average exchange rate was 54-64/dollar.
Between July 2013 and October 2013, exports registered growth of 11-13 per cent. In October 2013, exports rose 13.5 per cent to $27.3 billion, compared to the corresponding period last year.
November, December and January 2014, however, saw single-digit growth.
Despite the global financial crisis hitting India’s external sector adversely, merchandise exports recorded compounded annual growth of 17.4 per cent between 2004-05 and 2012-13. In 2012-13, exports had fallen 1.8 per cent.