India Inc expects a friendly FTP to bring exports back on track

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Saurabh Gupta | 12 Apr, 2014
Disappointed with the trade data for financial year 2013-14, apex exporters body and leading industry chambers are expecting an industry friendly new Foreign Trade Policy (FTP) 2014-19, which will help stimulate India's exports.

"Focus on services, e-commerce, hi-tech products, merchanting trade and branded goods exports in new Foreign Trade Policy 2014-19 to bring exports back on track," said M. Rafeeque Ahmed, President, Federation of Indian Export Organisations (FIEO) in a press statement on Friday.

Ahmed said that he is working on 100 day agenda for the new Government which will figure issues which can be effectively addressed in 100 days to bring exports back on track. The new Foreign Trade Policy 2014-19 should also focus on services exports, e-commerce, hi-technology products, merchanting trade, branded exports and effective co-ordination with States to push exports.

Similarly, Chairman, CII National Committee on Export & Export Competitiveness, Sanjay Budhia, in his statement said, "The economic conditions in the US and the euro zone are not very favorable for exports and we hope the Indian government will help the exporters by providing help by way of including more products and countries for Focus Product Scheme and Focus Market Scheme, where we have a comparative advantage and this should be addressed on a priority basis as it will give the necessary push to the industry."

"We hope an industry friendly FTP is announced soon which will help stimulate India's exports," he added.

Commenting on the trade data for financial year 2013-14, FIEO Chief said that the contraction in exports in February (-3.67 percent) and March (-3.15 percent) was disappointing.

"With total exports of USD 312 billion, we are short of USD 13 billion from the target of USD 325 billion fixed for last fiscal," said Ahmed, admitting that the target of USD 325 Billion was a modest one requiring about 8 percent growth and the double digit growth in exports between July to October, 2013 gave hope that, "we may easily cross the target," added Ahmed.

However, slow down in manufacturing, liquidity crunch, currency appreciation coupled with depreciating currency of few of our trading partners, softening of metal and commodity prices and uncertainty in few regions of the world are the prime reasons for the slowdown, observed FIEO Chief.

Ahmed said that some very important sectors of exports like Gems and Jewellery, Engineering, Electronics, Iron Ore, Silk and Woolen textiles, Guergum, Oil meals, Tea and Coffee exhibited negative growth while Pharma, Petroleum, Agri and allied sectors posted very modest growth pulling down overall exports.

Indian exports to Latin America suffered a big blow with exports dropping by 20 percent in 2013-14. Exports to GCC, primarily on account of lesser exports to UAE, and North Africa also witnessed declining trend in the last fiscal.

President FIEO said, "while we can draw some solace that country like China also suffered a decline of 6.6 percent in March but we have to address the factors pulling down our exports unmindful of global developments."

Sanjay Budhia has also shown his disappointment on trade data and missing the export target. He said, "Its apparent from the recently released export data of March 2014, that India has missed to reach its export target of USD 325 billion for this fiscal as currently it stands at USD 312 billion."

"Factors which could be attributed for slowdown in exports are exchange rate volatility, steep hike in global oil prices, curb on gold imports coupled with its direct impact on jewellery export, and regulatory problems confronting India's drug industry in the developed economies. Our neighboring partner China also witnessed slump in exports during March'14, and this could be an indicator of looming slowdown in global demand," said Budhia.

Expressing concern on the decline in exports for two consecutive months, Dr Arbind Prasad, Director General, FICCI said, "it is worrisome that our exports fell by more than 3 percent in each of the last two months and we have missed the export target. Looking ahead, global growth is expected to improve and the expansion in global output is likely to be led by developed economies, particularly USA. We hope growth in export will pick up this year on the back of such recovery though weakness in China and strengthening of Rupee pose some risk."

"27 percent contraction in our trade deficit to USD 138.6 billion last year from over USD 190 billion in 2012-13 is a positive development; it will further ease the pressure on our current account deficit and considerably reduce the country's external sector vulnerabilities," Dr Prasad added.