SME Times - Eurozone Crisis May Drag Down Exports: Study, Eurozone Crisis May Down Indian Exports, Indian Exports May Effected by Eurozone Crisis

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SME Times News Bureau | 12 May, 2010
Exports to Europe could witness a slump of close to 10 percent and even the government's overall export target of $ 200 billion for this fiscal could be at stake if the Eurozone sovereign crisis spreads to more countries of the European Union (EU), according to a new study carried out by an industry body.

The analysis carried out by the Associated Chambers of Commerce and Industry of India (ASSOCHAM) said that nearly 10-12 percent slump is foreseen in export proceeds of India in European markets particularly that of Greek, Portugal and even Spain in the first quarter of current fiscal.

"The government set modest export target for current fiscal in view of saturation in economies of scale without anticipating sovereign debt crisis of leading European economies which account for 26 percent of India's total exports," the study pointed out, adding that the export target of $ 200 billion for 2010-11 set by government could be at stake if Eurozone debt crisis is not prevented from spreading across new parts of Europe.

The export products which are likely to be adversely affected include in areas of engineering, readymade garments, yarn, chemicals, oil seeds, electrical goods and leather, said ASSOCHAM Secretary General, D S Rawat while releasing it's assessment in New Delhi on Tuesday.

According to the industry body, the exports which are unlikely to be adversely affected even if European crisis persist could be gems and jewellery, marine products, tea, fruit and vegetables, tobacco and plastic products.

The ASSOCHAM chief viewed that as the European economies start absorbing benefits of economic bailout , their economies will create space for Indian products most of which would be traditional and slowly and gradually make up for the lost time. However, its impact would become visible only in latter part of second quarter of fiscal 2010-11 and at the most in the beginning of third quarter of ongoing fiscal, he added.

The ASSOCHAM assessment also said that orders booked in advance even from the crisis hit countries for sourcing some products like pharma products and gems & jewellery from India are unlikely to witness cancellation, but it cautioned that payment schedule will have to be restructured.