Demand contraction in traditional markets is hurting shipments
Amid weak economic sentiment and falling industrial output, India, on Thursday, reported a 4.16 per cent drop in its exports at $25.68 billion in May, mainly due to slump in global demand and slowdown in domestic industrial growth. Imports also fell by 7.36 per cent to $41.9 billion. The trade deficit also narrowed to $16.3 billion during the month, from $18.5 billion a year ago. “We have also seen the IIP (index of industrial production) numbers. So, you can correlate the reasons why exports have not done too well…we are recalibrating strategy to meet an ambitious 20 per cent growth target in exports for the current fiscal,” Commerce Secretary S. R. Rao told journalists here.
He pointed out that contraction of demand in India's traditional markets, particularly in eurozone economies, was hurting exports.
“We are still not out of the woods...bailing out of Greece and Spain is still a work in progress. We are working with industry to find ways to tackle the difficult economic situation globally. We need to look at alternate markets. The ASEAN region is showing positive signs…then there is Africa and Latin America. These are markets, where, I think, we need to look more intensively...internal work is in progress,” Mr. Rao added.
In May, decline in exports was mainly in petroleum products (- 26.07 per cent), engineering goods (- 15.67 per cent), gems and jewellery (-9 per cent) and readymade garments (-15.82 per cent). On the import front, gold and silver was down by about 51 per cent, while plant and machinery dropped by 8 per cent. However, imports of crude oil were up 14 per cent.
Commenting on the export figures, Federation of Indian Export Organisations (FIEO) Chairman Rafeeque Ahmed said the next few months would be challenging. But with a little stability in the eurozone, exports would be back. “Exporters should explore new markets and new buyers in the existing market to take full advantage of depreciation of rupee while simultaneously increasing their productivity through efficiency and cost cutting measures as a long term strategy to survive in world market,” he added.
Keywords: Indian economy, Indian exports
India's growth story is a big bubble of soap which one day will burst and vanish. The reason I am compelled to say so is that, despite being the nation with highest skilled labor/engineers, we are lacking hugely in regulating the agricultural sector which is at the roots of every industry, the raw material supply is affected if agriculture department is slow.
Service sector is highly dependent on Western world, that we are bound to be affected if they see slight up and down in their economies. India has to realize that they should support more R & D in each field and provide employment opportunities to mass locally.
Recent story of a engineering graduate getting hired by twitter is a little buttock clinching moment for India Inc because it slaps in our face saying that "poor you, don't have any opportunities, and we are hiring this brilliant mind to rule over you in coming future". We need to support our local industries, entrepreneurs, start ups, most important government jobs.
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