Export Dip Rings Alarm Bells

Senior ministry officials attributed the decline in overall trade to the slowdown in world trade in addition to certain exogenous factors acting upon the country's exports. Sources said that the August data are eagerly awaited to confirm or dismiss the trend.

The Federation of Indian Export Organisation (FIEO) and the Engineering Export Promotion Council (EEPC) have both expressed doubts over whether the $38-billion export target for the year can be met, a growth of 20 per cent over last year. The ministry is not yet thinking of scaling down its target.

Engineering exports, for instance, have grown by just 12 per cent in dollar terms in April-July 1996-97 over the same period last year. This is against a target of 20 per cent.

 

Further, prime steel including ferro alloys have shown a negative growth of 1 per cent, with a very sharp fall in July.

A recent FIEO study reveals a 62-per cent fall in software exports in April alone at $10.2 million compared with $27.4 million in April 1995. In this month, gems and jewellery, leather manufacturers and readymade garments of manmade fibres showed a fall of 22 per cent each.

Exporters attribute the slowdown to the transaction cost of pushing cargo and tight credit position. Banks are charging exorbitant rates of interest beyond the 90-day limit for remittance of export earnings. Till 90 days the banks charge 13 per cent. However, if the 90-day limit is exceeded banks are free to charge any rate and this has been varying between 18-24 per cent. This rate is charged for the entire period if 90 days is exceeded. Yet banks get refinance from RBI at 11 per cent.

FIEO said in a statement yesterday the decline was owing to domestic factors like infrastructural deficiencies, political uncertainties and the government's failure to carry out policy commitments made earlier in the year. The federation said it was "particularly puzzled by the heavy fall in software exports which have been among the most promising exports of the country".