No export sops, US recession - exporters need to decide their fate

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Bikky Khosla | 30 Sep, 2008
With export sops coming to an end and US recession dampening production, exports and profits further, exporters now need to find other alternatives to remain in business. Consumer demand in developed economies is certain to be hurt by the current financial crisis, leading to lower demand for Indian goods, thus affecting Indian exports.

One has to begin by focusing on markets other than the US. Exporters need to diversify exports to other countries. The European Union, Middle East and African countries can be the next best market options to counter the shortfall. Asian markets too are emerging as prospective markets for Indian exporters. Concentrating on these markets will provide a buffer against the slowdown in the US and also help in doing business sans export sops. Diversifying export destinations to Latin America, South-east Asia and ASEAN regions in recent times has already helped Indian exporters to reap benefits, but this trend needs to be carried forward with more vigour.

Secondly, both manufacturers and exporters need to revamp their product catalog and their respective price tags. Multiple price points in multiple locations can be the order of the day. For instance, if a buyer finds the price of a particular product beyond his budget, the product catalog should have an alternative at a lower price which suits his budget. Moreover, different pricing of the products in different geographical locations can help exporters keep their profit margins intact. De-risking oneself from one particular currency is very vital now with the rupee remaining unstable against the dollar.

Thirdly, both manufacturers and exporters alike need to integrate IT tools in their operations to streamline the process and shorten delivery time. They should also take professional help in marketing their products. E-commerce, particularly business-to-business (B2B) tools have changed the way one conducts business and competes in the global marketplace. Exporters need to incorporate these tools in their marketing strategy.

However, things are not that bad either for Indian exporters. The light at the end of the tunnel is that rapid inflation in China and other markets which are India's competitors, has and will bring business in Indiaâs way. Above that, in all probability, the 2% enhancement in the DEPB rate announced in the annual foreign trade policy (FTP) earlier this year is likely to remain for at least six months.

Now we need to ask ourselves, 'Do I change my strategies based on the current global scenario and thrive, or do I carry on with my age-old strategies and just survive?' Now is the time to take a decision...a decision that will decide your future.