No end to exporters' woes

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Bikky Khosla | 20 Jul, 2010
Finance Minister Pranab Mukherjee too has now acknowledged that there was still an uncertainty in the global markets and the impact of Eurozone crisis on Indian economy may be felt if the situation in the continent persists and is not restricted to only a few countries such as Greece and Hungary.

While the minister acknowledged that the impact of the global financial crisis of 2008 can be seen in the Indian export figures which were down for 11 consecutive months, he argued that financial inclusion in the long run can help sustain India's growth story.

Meanwhile, Monday's export figures showed that the sector remained robust with a 30.4 percent annual growth in June at $ 17.75 billion mainly due to diversification of products. Having said that, though these figures signal the fact that a turnarouÂnd in global demand is round the corner, they are actually much lower than the pre-crisis level before 2008. In addition, all labour intensive sectors are still feeling the heat with sectors like readymade garments and textiles continuing to see a decline.

The Commerce secretary Rahul Khullar himself has said that uncertainty linked to the Euro zone continues to worry exporters with a number of exporters complaining about not getting payments from buyers in Europe on time.

Meanwhile the sector's woes do not end here. China has lowered its export projections for this fiscal mainly due to its decision to produce less. This means the country's demand for raw materials from India would also fall which again could affect exports from India.

Now there are reports that the commerce ministry has sought additional resources from the finance ministry to continue providing export sops to certain sectors such as leather, engineering goods, textiles and pharmaceuticals, which can be a good move.

Moreover, the exporters' concern on cost of export credit in the new base rate regime needs to be answered soon to keep the sector moving forward. Amidst today's global scenario, though several industry experts say that the country is on course to realize $ 200 billion target for the current financial year, I have real doubts.