You are here: Home » Economy & Policy » News
Business Standard

Textile exports make a comeback in FY14

Overall revival marred by crude oil, petroleum products and gems and jewellery

Indivjal Dhasmana  |  New Delhi 

Textile

Textiles were the only star turn in an otherwise humdrum Indian export performance in 2013-14. Cotton fabric exports grew 19.90 per cent to $8.07 billion in the first 11 months of 2013-14, accelerating from 8.30 per cent growth in the same period of 2012-13. Cotton garment exports grew 8.14 per cent to $8.15 billion and synthetic fabrics and made-ups grew 12.95 per cent to $4.63 billion in the first 11 months of 2013-14 against contractions of 14.19 per cent and 12.47 per cent, respectively, in the comparable period of 2012-13. "The currency fluctuation helped us. We became more competitive and were able to rework our pricing. Also, we were able to grab the Chinese market share because they were selling at a higher price," said HKL Magu, an apparel exporter who supplies to Calvin Klein, Superdry and Next. Magu is expecting a 15 per cent rise in his 2013-14 turnover and sees demand surging in 2014-15. Not only exports, India’s textile production grew 4.6 per cent in April-February 2013-14 even as the index of industrial production shrank by 0.1 per cent. Recovery in merchandise exports overall was slow in 2013-14, despite the rupee’s depreciation. Exports rose just 4.43 per cent to $281.82 billion in April-February 2013-14 against a 2.62 per cent decline in the corresponding period of 2012-13. The rupee depreciated over 11 per cent, year on year, during April-February 2013-14. Though export data for the previous financial year shows a rise of 3.98 per cent from the prior year, disaggregated numbers for most items are available only till February. Trade revival was marred by the two largest components of India’s export basket: crude oil and petroleum products, and gems and jewellery. Drugs, to an extent, also slowed the recovery. Exports of crude and petroleum products, which constitute a fifth of India's total outbound shipments, climbed 2.13 per cent to $56.56 billion in April-February 2013-14 from $55.38 billion in the corresponding period of the previous year, when they had grown 9.15 per cent. The average price of Brent crude fell to $107.59 a barrel in 2013-14 from $110.12 in 2012-13. Lower realisations ensued as refinery products fetched less. Sluggish overseas demand also contributed. “The rupee’s depreciation is not helping because global demand is low.

Our petroleum exports are not elastic to price,” Madan Sabnavis, chief economist of CARE Ratings, a credit rating agency, said. Ajay Sahai, director-general and CEO of the Federation of Indian Export Organisations (FIEO), attributed the slow growth in petroleum product exports to low rates in global markets. Reliance Industries’ latest results show exports from its two refineries reached $41.1 billion in 2013-14, up 4.5 per cent from $39.3 billion in the previous year. The company’s exports had climbed 9.16 per cent in 2012-13 from $36 billion in 2011-12. Exports of gems and jewellery, where data is available for the full year, contracted 8.86 per cent to $39.5 billion in 2013-14 from $43.3 billion a year ago as the government curbed the import of gold, a key raw material. Jewellery exports had shrunk 3.3 per cent in 2012-13. The government hiked the import duty on gold for a third time in eight months to 10 per cent last April, besides seeking export of 20 per cent of imported gold. Vipul Shah, chairman of the Gems and Jewellery Export Promotion Council, said, “More than other curbs on gold imports, I will ask for cutting down the import duty on gold. In that case, exports of gems and jewellery can grow 15 per cent this financial year, as the world markets are recovering. Like previous years, three export lines apart from petroleum and jewellery crossed $10 billion in 2013-14: transport equipment, machinery and drugs. As regulatory strictures hit Indian drug companies in the US and other advanced markets, pharmaceutical exports climbed 2.71 per cent to $13.55 billion in April-February 2013-14 from $13.17 billion in the corresponding period of the previous year, when they had grown 10.97 per cent. Utkarsh Palnitkar, partner and head of the life sciences practice at consultancy firm KPMG, said 40 per cent of India’s drug exports head for markets that have strict inspectors and this chunk could be hurt by regulatory zeal. Exports to markets like Africa and West Asia, which make up the remaining 60 per cent, would remain insulated from the erosion, he added. Transport equipment exports rose 19.53 per cent to touch $20.05 billion in April-February 2013-14 from $16.77 billion in the same period a year ago, when they had fallen 13.67 per cent. India’s automobile industry may be struggling with slowing sales at home but foreign markets provided them succour in the previous financial year. Among other significant items of export, machinery was up 6.66 per cent at $14.17 billion in April-February 2013-14 against $13.63 a year ago, when they had grown 5.79 per cent. Electronic exports declined 4.72 per cent to $6.96 billion, steel rose 30.36 per cent and basmati rice 42.32 per cent. R S Sheshadri, director at Tilda Riceland, one of India’s leading basmati rice exporters, attributed this to the 20-30 per cent increase in price Indian basmati fetched in the international market in 2013-14 as compared to the same period last year. Though, volume wise there might not have been a significant rise in basmati rice exports.

First Published: Sat, April 26 2014. 21:15 IST
RECOMMENDED FOR YOU