Steep fall in engineering exports ‘shocking’

Commerce Secretary Rajeev Kher has said that the steep fall in engineering exports in October came as a “shocker.”

He reassured exporters that the ensuing Foreign Trade Policy would address their concerns over the slowdown in key markets such as the European Union and Japan.

Reassuring exporters that the government was aware of the challenges being faced by them in the backdrop of slowdown in important markets, Mr. Kher said the policy would target new markets such as Africa, South East Asia and CIS countries. He was speaking at an Engineering Export Promotion Council (EEPC) event.

The Commerce Secretary emphasised that exporters must leverage the government’s liberalised foreign direct investment (FDI) policies to move up value chains for staying competitive in the global markets.

The EEPC India Strategy Paper Mr. Kher released at the event noted with concern that no significant change in terms of skill and technology intensity was observed in the Indian engineering exports basket over the years and India continued to be an exporter of products of low and medium skill and technology.

Overall India has not performed well in product categories which require high technical know-how and skills, it says.

“It can be seen from the average export and import volume data for the three year period from 2010 to 2012, that India exports more low skill and technology intensive products to the U.S. than high skill and technology intensive products.”

According to the paper, against $62 billion in 2014, India’s engineering exports could rise up to $126 billion by 2018-19 if exporters took advantage of the liberalised FDI regime and tap large enterprises for high-end technology.

“While the $126 bn aspiration might be considered aggressive in the light of the current economic scenario a number of factors give us reason to think otherwise,” the EEPC India paper compiled by consultancy major KPMG , points out.

In the Indian engineering context, it is seen that sectors which have attracted FDI have performed better than average, according to the paper.

It recommends that an unambiguous environmental and pollution laws and time-bound action for same clearance should be spelt out by the government. It also suggested tax incentives to the expatriates for the export-oriented units.