Urgent steps imperative to revive engineering exports: EEPC

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SME Times News Bureau | 13 Jul, 2013
Continuous economic turmoil in the European economies and no pick-up in North America may cast shadow over India's target of achieving USD 63.45 billion engineering exports in the current fiscal of 2013-14, necessitating urgent industry- government measures to deal with the challenging global environment.

"The urgent steps are imperative in the wake of over eight percent drop in engineering exports in April, 2013 against the annual target of achieving about 12 percent growth in the current fiscal," the Engineering Export Promotion Council (EEPC) recently said in a statement.

"The setback is largely because of negative trend in the European and North American economies, the largest markets for the Indian engineering products," it added.

Reacting on the June trade data released on Friday, Chairman, EEPC, Aman Chadha said, "With the two largest markets of the European Union and the US not supporting us, we have to urgently devise a strategy to reach out to newer markets in Africa and Latin America and within Asia. Since going into the new markets in the short run is an expensive proposition, the industry would need a big support from the government on urgent basis."

"We are not sure about the exports target for the current year being met and the year 2013-14 is expected to go down as one of the worst phases for the overall exports and more so for the engineering sector, which is among the largest components of the countryâs export basket," according to Chairman EEPC.

Chadha said, "It is in this context that the EEPC, senior officials of the Commerce Ministry will hold brainstorming session with the diplomats of the African missions in India on July 16 to push engineering exports to Africa so that the loss in the western markets can at least partly be made up."

Engineering exports which had shown an impressive compound average growth rate of 31 percent between 2003-08 suffered jolt after the global financial crisis of 2008 as the maximum impact was felt in the European economies which are the largest market for the Indian engineering products. The setback was also seen in the North American markets which are the second largest destination for these products.

After a brief recovery from the setbacks of the 2008 global crisis, engineering exports again fell by 3.19 percent to USD 56.76 billion in 2012-13 from USD 58.63 billion in the previous year.

While some diversifications efforts along with support from the government have been made to find new markets in Africa and Latin American countries, the base in the new destinations is so low that it will many more years to scale up the shipments there, the EEPC said.

The EU is India's largest export market and engineering exports, which in 2004-05, accounted for nearly 24 percent of total engineering exports, saw its share dwindling and by 2012-13 fell to 19 percent.

"Thus, a fall in 5 percent in total engineering exports is a substantial loss in market. This is more so for engineering goods, which is a long gestation industry working on long term contracts and where it takes considerable time to develop markets and credibility. The same is the case in North America, primarily the USA, where our exports share is around 11-13 percent," the EEPC said.

Both these markets have shown negative growth even in April 2013, it added.