 "Anupam Shah")
Engineering export council, EEPC India recently sent out a strongly worded press release to register its protest against government's decision to cut back the duty drawback rates on engineering products. Questioning government's intention to control Current Account deficit(CAD), the exporters group describes government move as irrational. In an interview with Probal Basak, the newly appointed chairman of EEPC India, Anupam Shah speaks about its concern and outlook for the year:
Why you are so upset with the cut in duty drawback rate?
The Engineering sector is in terrible shape. We are one of the largest contributors to the country's export basket. In April to July period this year, we had a negative growth. In such a scenario, in an unfair treatment to the engineering exports, the finance ministry has cut back the the duty drawback rates for over 3500 products ranging between 25-40%.
It is affecting our margin. In lot of the products duty drawback was 2.5%, so if the government has made it 1.6%, government has taken away 33% of duty drawback. Lot of time people are working on a margin as low as 5%. Government decision is taking away that as well.
Large players like Tatas, have got their own strong voices. But, small players, which contribute to about 60% of engineering product exports, work on very small margin. We have to deal with hundreds pf challenges. Every now and then the small benefits given to us are taken away like this. Earlier export used to be remunerative, now a days people feel the local market is more remunerative.
So how do you see the year for country's engineering exports?
We could have achieved a higher growth, but now we are targeting a 10% growth Because of the reasons like irrational moves by government, we are lowering target.We believe in the current scenario government had to be committed to helping engineering sector export and reducing the current account deficit. I do not understand why, engineering sector is being singled out,when it is one of the highest contributor to country's total export.
What gives you the confidence to target a 10% for the year, growth despite a decline of 4.19% between April-August period of 2013-14?
The export turned positive in August with 2.27% growth. September I think, was good. The rupee devaluation had helped to some extent. Also, from October onwards normally export picks up. Last year, total engineering exoports was $56.7 billion, we are hoping to go clsoe to $63 billion. But, of course we can achieve that unless there is not many negative shockers. The US government shutdown is a concern, but we are hoping it would not continue long. We are also meeting government officials to make them aware of our concern.
What kind of support are you seeking from the government?
We believe are getting a differentiate treatment. I think one of the factor is we do not have our own ministry, unlike textile ministry which is there to take care of concern of the garment sector. We are a small part of the commerce ministry, which has to deal with hundreds of things and we are just one of them. There is MSME ministry and more than 55% engineering exporters belong to MSME category.
We are asking for creation of Rs 500 crore technology upgradation fund over a period five years from MSMe ministry. It can be support for technology upgradation as it is being done for garment sector.We need an advocator, we hope MSME ministry will take care opf our concern.
With the rupee stabilising around 62 level, how do you see the impact on export ?
Exporters do not benefit, when rupee id volatile even if it goes down to 68 level. If it changes everyday, exporters find it it difficult to quote prices. We are happy that there is stability now and it is not changing everyday drastically as it was the case last month. Also, if it is in certain bandwidth government should not be going out to make it stronger. Unless there is very excruciating circumstances there should not be monetary support. Now it is stable, there should not be artificial effort to support rupee.
