May exports plummet, India Inc seeks immediate relief

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Saurabh Gupta | 17 Jun, 2015
Seeking an immediate relief package for exporters, the leading exporters bodies Tuesday said that the government should act fast to arrest continuous sharp decline in exports.

Reacting to the sharp decline on the trade data for May, released on Tuesday, President of Federation of Indian Export Organisations (FIEO), S C Ralhan said that the continuous negative double growth in exports since December 2014, is matter of serious and grave concern as the decline has further exasperated to over the 20 percent in May 2015.

"This, if allowed to continue will severely impact the Indian economy," he added.

FIEO has been continuously raising this serious concern with the government, said Ralhan. However with such kind of steep decline, FIEO expects that the government should take a serious note and act fast to arrest the decline.

FIEO Chief stated that the prime reason continues to be low prices of crude, metal and commodity. Petroleum exports further declined sharply by 59.10 percent which itself is responsible for an overall decline of about 12 percent, as the sector used to contribute to 20 percent of country's exports.

Ralhan said that decline in exports of Engineering Goods, Gems & Jewellery, Organic & Inorganic chemicals, Drugs & Pharmaceuticals, Leather & Leather Products, Electronic Goods and Plastics & Linoleum are of equal concern as these sectors have also either shown further decline or have further moved into negative territory.

President FIEO said that emerging economies particularly of Asia are also contracting due to slowing down of China. Ralhan said that Indian exporters are also losing out their competitiveness due to high logistics cost and ground level transaction costs.

Adding to the woes, the services sector have also shown a decline in both exports and imports by around 5 percent and 20 percent in April, 2015 respectively as compared to the same period previous fiscal, he added.

Ralhan said that the Interest Subvention Scheme may be re-introduced immediately and liquidity crunch of the exporters in the form of refunds may be addressed with timely release of the exports benefits. Also need of the hour is the immediate Introduction of Export Development Fund for aggressive marketing.

Seeking an immediate relief package for the exporters, apex industry body ASSOCHAM said that continuous fall in merchandise exports clearly shows deteriorating external scenario.

While ASSOCHAM has recently come out with a paper forecasting flat growth or no growth with total exports staying in the region of USD 310 billion (bn) in the current fiscal, reaching even USD 300 billion mark could be a tall order, according to the unfolding trend. "Thus, the estimates need to be revised downward."

"However, it looks exports for the fiscal 2015-16 may struggle to touch even the USD 300 bn mark, which would make the sector stagnating for three years in a row," said D.S. Rawat, secretary general of ASSOCHAM.

"The extent of subdued demand for the merchandise in the global market is quite visible by these numbers," said Rawat.

"The Commerce and Finance Ministries should jointly devise a strategy to deal with the difficult situation which would eventually affect the country's overall balance of payments," he added.

Country's exports shrank by over 20 percent in May to USD 22.34 billion, continuing the declining trend for the sixth straight month, caused by the global economic slowdown, fall in crude oil prices and appreciation of the rupee.

The trade deficit in May registered a three-month low at USD 10.41 billion -- nearly 8 percent lower than the figure for the same month last year at USD 11.24 billion, commerce ministry data showed on Tuesday.

The country's exports in May 2014 stood at USD 27.99 billion. Imports, too, declined 16.52 percent to USD 32.75 billion.