Indian export sector would remain 20% short of its target for 2008-09 on slumping demand from overseas markets and rising coastal transportation charges.
According to the analysis of the Associated Chambers of Commerce and Industry of India (Assocham), exports target of India are likely to remain below the target for the fiscal year 2008-09, as reported by RTTNews.
Assocham projects that exports will remain 20% below the target of $200 Billion for the financial year 2009. Trade deficit of India will probably remain near about $110 Billion. In October 2008, Indian exports contracted by 15%. Also, for the first time since 2003, a retrenchment was recorded in the overseas shipments. As compared to just 3% increase in September 2008, there was a decline of 20% in non-oil exports in October 2008. Further, during April-October 2008, a growth of 21.5% was registered in exports against over 23.3% increase during April-October 2007.
The primary reason that led to the decline in the Indian export sector is the worldwide financial meltdown, predominantly in the US and Europe. These two markets make up for 35% of total exports from India. Thus, reduction in demand in these markets has negatively affected the export sector of India.
Further, the potential export sectors of Indian economy have been hit by the present economic conditions in the country. The government of India has also hammered the Indian exports by imposing some restrictions on exports. Fall in the value of dollar and increasing charges of coastal transportation have also hampered the growth of export industry. In mid 2008, the strengthening of the Indian currency also struck the trade as it led to the cancellation of foreign orders.
Moreover, factors like constantly increasing costs of input and power and infrastructure are still a big issue for the manufacturing industry. These factors are leading to a reduction in costs and competitiveness of the country’s exports. And tough competition from the neighboring countries such as China, Bangladesh, Bhutan and Pakistan has made the business more difficult.
According to a Research Analyst at RNCOS, “The plunge in export industry of India is just a preview of the tough time it is going to see in near future. It is proving very tough for the Indian exporters and buyers to access the liquidity. Consequently, the exporters should adopt necessary initiatives to blend the latest technology into their goods, otherwise, the country’s export industry is expected to suffer even more severely.”
