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Ailing export sector awaits right govt. prescription
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Bikky Khosla | 28 Sep, 2010
With banks attempting to de-risk their portfolios and lend afresh to companies without repayment issues, a new trend has emerged wherein the share of bank credit to export sector has shrunk considerably. And the worst affected are the export-oriented sectors such as textiles, gem and jewellery and engineering.
The recent data released by Reserve Bank of India data has shown that while export-oriented sectors had accounted for 32 percent of all the credit that banks extended in 2004-05, their share has shrunk to 22 percent in the latest year.
With medium and large companies getting a larger share in bank credit than small-scale industries, I believe this trend is owing to the fact that these sectors are at present seeing lower sales value, due to lower commodity prices and realisations.
Interestingly, despite being a priority lending sector, credit to SSIs declined by 12 percent in 2009-10, which is against a 38 percent growth of credit to large and mid-sized companies.
Meanwhile the story doesn't end here. When I look at India's current merchandise exports, they are increasingly becoming flat. The month-on-month figures are in the range of $16-$18 billion and there is not much increase in terms of volume.
In April, May, June, July and August exports have reached $16.88 billion, $16.14 billion, $17.74 billion, $16.24 billion and $16.64 billion respectively. This gives a fair indication that although exports are registering considerable growth annually, the month-on-month growth is still not robust.
Despite the sops offered by the government in recent times, I get a feeling that the government is focusing solely on the job creation aspect of the export sector, providing incentives to the high-employment sectors.
I strongly believe that the authorities should now focus on making exports more competitive if we are to compete with emerging players like Bangladesh, Vietnam and Indonesia. For instance, countries like Bangladesh have, of late, made considerable inroads into India's traditional markets including the US. For starters, the government can probably look at areas like an increase in duty drawback rates and providing cheaper loans.
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Exports - The dying Sector
Mansoor . | Wed Sep 29 17:58:49 2010
As long as Forex ws Scare & the Govt,Needs were high , the Exp. Sec. was being Misused ,as the Forex pouredg in thru other areas ,Traditional exports were neglected , we know the Textile and Handicraft Sectors r on the Verge of Dying ,Exports are down by 60 / 70 % within the Lst 3 yrs . Within a Matter of 5 yrs I can say these sectors will be washed off .
With the Western Compulsion of NO CHILD LABOUR there r no more artisian to learn the trade , Drawback on the Handicraft sector was reduced by about 25 % this yr. Export is no more an important area for the Govt. they have a Surplus of Forex , even though the Balance of Payment is in the Negative .
Dont expect any help in any form from the Govt. what ever they give is an Eye Wash .
DrawBack is the Only thing they give to the exporter , which is only a part of the duty refund on the Raw material used , So no big deal , we always get back less then what was really paid , Shifting to the SEZ does nt make sense , the exporter cn nt move their entire establised and runnig setup to a new area , with all practical problems , yes it is possible to set up a New Factory ,but who would want to set up in this difficult times , Not even one SEZ of the country is Successful , they may have roped in a few , but it does not mean it is Successful , i cn well gv the examples of Moradabad and Jaipur ,
there r only 7 small factories in Moradabad SEZ and 4 in Jaipur , while in each city .there are a 1000 exporters .so no big deal .Do yur bst
Govt Focus on Export
NAMASIVAYAM | Wed Sep 29 10:16:12 2010
Indian Government ignored the textile exports from 2007 onwards. Once upon a time Textile sector was the biggest sector offered best employment and export earnings to the country. But after the IT/ITES field booming and government revenue increased on account of sale of mobile operator licenses, etc., the government focus only in revenue and not economic development like encouraging exports. etc.
promote export
S.Mohana | Wed Sep 29 05:26:45 2010
I think the writ up has come at the right stage. If we do not wake up , even countries like vietnam an Bangladesh may snatch our markets .
Ailing export sector awaits right govt. prescription
Pravin Patel cell 09371720662 | Wed Sep 29 05:02:25 2010
Yes sir I fully agree on what you write above. The problem is we all knows the problems but no one come out with solution.To my view.
1. We know there is almost no manufacturing in U.S., Europe and many other countries.
2. We know there is big potential market.
3. We know above buyer have few alternate like you said India, cccChina,Bangaladesh,Srilanka and Now upcoming Vietnam.
My view we should make bench mark with all this competitors in terms of Delivery Lead time,Cost, sale price, Quality and manufacturing facility and their production culture. accordingly we have to make stretagy to boost up our sales and I am sure we can achieve unbelievable figures.
Ailing Export Sectors
Jatinder Pushkarna | Wed Sep 29 04:09:18 2010
Very True that the authorities should now seriously focus.We are talking to increase in duty drawback rates though in some of the cases this benifit has already been withdrawn. For example benifit on Loose Leaf of Leaf Spring.Exporter get benifit only if he Sell complete Leaf Spring Assy otherwise ZERO DEPB . Whereas in after market exports 90% demand is for Loose Leaf. Hence we can not compete with China.
Indonesia , A very big market though we need to have support from our own Govt to enter these market.
Ailing Export sector awits right government prescription
Shrikant Parulekar | Wed Sep 29 02:09:33 2010
One of the main pillat of Foreign Trade Policy 2009-2014 is to reduce transaction cost.
Howevr in Goa Central Warehose Corporation's ICD is acting just to contrary. They have appointed a contractor to handle all transportaion and it is made mandatory for all exporters to use his services only. This contractor's rates are anywhere betwenn 70 to 80% more than the market rates.
Surely somebody somewhere is making good money at the cost of Country's export.
Ailing export sector awaits right govt. prescription
Zubin Poonawalla | Tue Sep 28 16:16:52 2010
I truly agree...the recent RBI stats indicate a slump of approx 11% credit extended to the Export oriented sector as compared to FY04-05...I strongly believe that the FM needs to focus his energies on making the export sector more competitive if we are to compete with players much below our GDP rankings. inspite of the recent sops offered by the GOI, i personally feel that they are solely playing vote bank politics by using this sector as an Employment Exchange.
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