Exporters see better times ahead but still jittery: Survey

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SME Times News Bureau | 14 Dec, 2009
Exporters see better times ahead as there is a surge in orders along with actual shipments going up but lack of overseas demand and low prices charged by competitor countries are still a concern, according to a survey released Monday.

"Exporters see better times ahead as 46 percent of respondents in a survey have cited a rise in orders as compared to the last three months and actual shipments have gone up," says the survey done by the PHD Chamber of Commerce and Industry.

The survey, which has 200 respondents, shows that 46% of exporters who have experienced a turnaround in exports, around 65 percent have seen their overseas sales growing between 1-20 percent while 35 percent have even seen an impressive growth of 21-50 percent.

Most of the participants of the survey are of the opinion that the recent recovery in the global economy is working its way to have a positive impact on exports. As a result, export volumes of many units have gone up and international buyers are once again showing interest in Indian products.

"Exports to countries such as USA, UK, Spain, Turkey, UAE, Republic of Korea, Russia, and even South Asian countries like Nepal and Bangladesh have shown a rise in market share .In fact, companies have increased their market share among existing trading partners as well as forayed into new markets", according to Satish Bagrodia, President, PHD Chamber.

However, the survey shows, still a decisive 54% of exporters still complain of weak external demand conditions which create an unfavourable environment for exports. According to these exporting units, the two most pressing problems relate to the lack of overseas demand and low prices charged by competitor countries. In fact, these exporters find that their order books are in bad shape owing to slow revival of demand in countries like USA, Europe, Middle East, CIS and South East Asian countries.

“What is also significantly hurting several companies are lower prices charged by competitor countries. The huge government support given by countries like China to their exporting units-and an undervalued yuan in the case of China is causing these countries to quote extremely low prices and is emerging as a main obstacle for Indian companies in converting export enquiries into orders”, added Bagrodia.

Similarly, around 42 percent are impacted by dumping of goods by the foreign supplier such as China and CIS countries even while a large majority, 58 percent do not perceive this to be a major problem.

According to the survey, not too many exporters feel that the Foreign Trade Policy announced this year would help reverse their fortunes. A majority, around 61 percent mentioned that policy would not help them affect a turnaround in exports. However, a sizeable number, around 38 percent, were positive about the impact.

Exporters find that many of their demands, which would have helped mitigate the impact of slowdown, have not been met. The problems relate to high cost of export credit and un-rebated state taxes and duties which raise the transactions costs of exports.

''The immediate focus of the government should be to provide incentives to enhance the competitiveness of exports in the global arena. Industry hopes that expansionary monetary policy should continue and fiscal incentives should be retained to revive demand and increase private consumption expenditure,'' said Bagrodia.

Besides, infrastructure bottlenecks required to be addressed and skill development initiatives should be taken on a priority basis. This would provide a fillip to the exporters, he further added.