New Federation of Indian Exporters’ Organisation (FIEO) president A Sakthivel has said he will prioritise export promotion and create a cell dedicated to that activity to identify new markets and products. The government’s export target of $400 billion in this fiscal is ambitious, but achievable, as the stupendous export growth seen in April-May provides the impetus for that, he said.
However, FIEO analysis of trade data of the last five years, i.e, calendar year 2016 to 2020, based on the figure of UN Comtrade, points to some areas of concern and some extremely positive emerging scenario, FIEO said in a press release.New Federation of Indian Exporters' Organisation president A Sakthivel has said he will create a dedicated export promotion cell to identify new markets and products. The government's export target of $400 billion in this fiscal is ambitious, but achievable, as the stupendous export growth seen in April-May provides the impetus for that, he said.#
Global imports grew at a compounded annual growth rate (CAGR) of 3 per cent during 2016-2020, while India’s exports grew at 2 per cent only. However, as India’s exports have taken a huge hit due to lockdown for a few months last year, the CAGR over those five years reduced and the same explanation, to some extent, also applies to global imports in 2020, it said.
Many labour-intensive sectors, contributing sizeably to India’s exports, are constantly losing their share in global market, FIEO said. For example, the woven garment imports globally remained static during 2016-2020, while India’s export of woven garments contracted by a CAGR of 8 per cent in the same period. Even in knitted garments, global imports remained stagnant whereas India’s exports of knitted garments contracted by 6 per cent during 2016-2020.
In the leather footwear sector, in which global imports grew by a CAGR of 1 per cent during 2016-2020, India’s exports contracted at a CAGR of 7 per cent only. Similarly, in other leather goods sector, including saddlery, leather bags, purses, belts, etc., the global imports remained static while India’s exports of such products contracted by a CAGR of 4 per cent.
There are sectors which have performed exceedingly well in the last 5 years and continued to be on a growth trajectory, yet they have tremendous potential to push exports further, FIEO said.
Despite reduction in the interest rates, the cost of credit to Indian exporters is much higher compared to competitors. As the Interest Equalisation Scheme (IES), valid till June 30, has offered competitive credit to manufacturers in micro, small and medium enterprises (MSMEs) and exporters of products covered in 416 specific tariff lines, FIEO requested the government to extend the scheme till March 31, 2024.
The delay in refunding exports-related benefits has further squeezed the liquidity of exporters. These include the delay in notifying Remission of Duties and Taxes on Export Products (RoDTEP) scheme rates, blockage of the Merchandise Exports from India Scheme (MEIS) portal from April to December last year, the delay in notification of Service Export from India Scheme (SEIS) rates and capital blockage of exporters tagged as ‘risky’
India’s logistics cost is about 14 per cent of GDP as against 8 per cent in the United States and 10 per cent in European Union (EU) countries. To support export infrastructure, FIEO suggested raising the budget allocation for the Trade Infrastructure Exports Scheme (TIES). The allocation for the scheme in fiscal 2021-22 is a meagre ₹75 crore, the federation noted.
Pressure on India’s logistics infrastructure since the beginning of the pandemic include container shortage, non-availability of vessels and high container freight The demand-supply mismatch for containers has encouraged a few stakeholders to put regular bookings on hold and allocate containers to those who are paying a premium, FIEO said. The freight rates have also skyrocketed compared to the pre-pandemic period.
India also requires a large shipping company as we remit about $65 billion every year as transport charges overseas and yet remain at the mercy of foreign shipping lines, the federation said. “If the Indian shipping lines get 25 per cent of the business, we have a captive market of over $25 billion waiting,” it said.
Sakthivel also urged the government to raise market access initiative funds from the current level of ₹200 crore. Alternatively, he suggested a planned marketing scheme, with a minimum annual corpus of ₹1000 crore, aimed at taking exports to $1 trillion in the next five years.
Fibre2Fashion News Desk (DS)
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