With the latest export data showing a slump, the FIEO chief speaks to The Hindu on how there needs to be some handholding by the authorities to sustain exports

With the country’s exports during the first five months of the current fiscal down by close to 6 per cent, the hope for garnering export receipts of $350 billion appears a tall order, particularly since the prospects for the lingering seven months remain shrouded in uncertainty over global economic recovery. The economy’s entry into the inaugural year of the 12 Five Year Plan now needs to be set against a bleak scenario of relentless inflation abetted by awesome spurt in both fiscal and current account deficits. This, all the more lends urgency to sustain the high export growth the country compassed last year so that the current account deficit could be bridged by a reduced trade deficit through higher export earnings, the President of the Federation of Indian Export Organisations (FIEO) Mr. M. Rafeeque Ahmed told The Hindu in an interview.

Mr. Ahmed concedes that the decline in exports during Apr-Aug 2012 must be seen against a very strong performance in the corresponding months of 2011 when export growth was in double-digits throughout the first half, month after month. Secondly, for almost a year now, the situation in Europe has only worsened. Mostly consumption in the European countries, gripped by crisis, has come down drastically. This is a market where people always made extra purchases when they purchased lifestyle items like shoes or garments. Thus even if one pair is pruned out of five pairs they purchase, the loss is 20 per cent for the sellers from India.

Pointing out that it is not just India which is feeling the loss of export orders in these troubled times, Mr. Ahmed said that even a mighty merchandise goods exporter like China is reeling under the slowdown of these markets. “But when I see India’s share in these markets and products is very small, less than 4-5 per cent, it does give us a chance to grow even by one per cent. The best thing has to come from traditional exports by pushing them hard, to get a share of the shrinking pie through policy support,” the FIEO Chief said.

Yet another favourable factor, Mr. Ahmed said, is the growing cost of manufacturing in China with high labour shortage and higher power cost, making the overseas’ procurers of Chinese goods a bit uncomfortable and compelling them to look for a relatively cheaper source. As the Chinese seldom made any business for a loss, India should exploit the Chinese hardships in the overseas markets by giving an aggressive push now, he said. Unfortunately this export order is not coming to India but is going to Indonesia, Thailand and other members of the Association of South East Asian Nations (ASEAN), Mr. Ahmed rues adding that the image of India being a difficult country to buy must perforce be removed from the minds of overseas buyers. In slowdown times like these, the importer cannot afford to brook any delay in shipment for which our export infrastructure needs to be put in spick and span, he said.

Stating that up to a certain level, only individual exporters can do it in terms of price and ensuring high productivity, the FIEO chief contends that the difference in the cost of finance from ASEAN member countries hovers somewhere between 4-5 per cent. While this needs to be bridged to render our exports competitive, the Commerce Ministry should double the assistance under the Market Access Initiative (MAI) and Market Development Assistance (MDA). Because the need of the hour is aggressive marketing through direct visit to market destinations and persuading the buyers of India’s ability to fulfill export orders, given the difficulties they encounter in the growing high cost merchandise goods from the Middle Kingdom, he added.

Mr. Ahmed also referred to problems in getting packaging credit in foreign currency, though this is being offered at a lower interest cost to exporters. He said as more than 70 per cent of exporters are small and medium entrepreneurs, the banks are not provisioning them with a reasonably adequate smaller credit. But they are keen on giving this only to big exporters who do not need this credit.

Finally, the FIEO chief said that more supportive measures in terms of export finance and redoubled assistance for MAI and MDA are needed at this juncture to ensure that the country’s exports in the current fiscal are sustained at last year’s levels. “If we are able to achieve last year’s and a little bit more and not more than that, we will be really happy,” Mr. Ahmed said.

geeyes@hindu.co.in

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