Declining Exports: What Businesses Should Know | SupportBiz

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Declining Exports: What Businesses Should Know

The decline in exports is attributed to softening of crude, metal and commodity prices

There is an increased concern over the negative growth in exports. S C Ralhan, President, FIEO, attributes the decline in exports to softening of crude, metal and commodity prices.

The prime reason continues to be decline in petroleum exports by 46.5% which itself is responsible for an overall decline of 9%, as the sector used to contribute to 20% of country’s exports.

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Decline in exports of rice, marine products, meat, dairy & poultry products, leather & leather products are of equal consequences as these sectors have shown great promise in the past.

Negative growth

President FIEO said that if we analyze our export of top 50 commodities for 2014-15, nearly 30% commodities have witnessed a negative export growth in last fiscal which is alarming.

Sectors like Plastics & Rubber which grew over 11% last year recorded a negative growth of 3.6%. Similarly, Agri & Allied products also recorded a negative growth of over 8% compared to marginal growth of 1% last year.

Equally worrying is negative growth in Gems & Jewellery, Electronics and Plastic goods as domestic capabilities are being augmented in these sectors.

What’s up

However, increase in exports of Engineering, Handicrafts, Carpets, Pharmaceuticals, Organic & Inorganic chemicals is very positive development as most of these sectors were exhibiting a decline from Jan, 2015 onwards. Other sectors which grew marginally as compared to last year includes leather, marine products, paper etc.

Ralhan said that while country-wise exports figure for April are not available, yet he feels, “our exports to countries dependent on oil, metal and commodities exports may have taken a hit as they reduced their appetite for imports with tighter capital control.”

The FIEO president said that while trade deficit has gone up marginally from US$ 10.08 billion to US$ 10.99 billion in April, 2015 as compared to the same month last year but a closer analysis of non-oil imports is required to see the constituent of imports as higher imports of raw-materials and capital goods may indicate little revival in manufacturing.

Measures to boost exports

Ralhan said that the Interest Subvention Scheme may be re-introduced immediately and liquidity crunch of the exporters may be addressed with timely release of the exports benefits.

Ralhan sought re-classification of countries such as Australia, New Zealand, Hong Kong and SAARC in Group B and Switzerland in Group A for MEIS benefit besides lowering of threshold limit for Status holders.

Rajeev Kher, Commerce Secretary, has said that exports should be based on core strength rather than incentives which have to adhere to WTO discipline.

“Indian industry should do product and process re-engineering and revisit marketing strategy to increase exports rather than basing it on incentives,” he said, adding Interest subvention scheme for exports sector will be announced shortly and with a view to provide stability to the subvention regime, the same will be available for 3 years.

Kher urged the industry to utilize FTAs for competitive imports of inputs and intermediate goods. Referring to standards, Commerce Secretary said that adoption of standards will not only help in boosting exports but will also protect the consumers from sub-standard imports thereby facilitatingdomestic manufacturing.

(News courtesy: