February 12, 2011

INDIA: Exports on fast track

New Delhi, Feb. 12: Encouraged by the performance of merchandise exports, the government plans to more than double exports to $500 billion in the next three years.

“If it (India’s exports) is going to be $220 billion (by the end of 2010-11), then setting a target of $400 billion is ridiculous ... implicit rate of growth will be of the order of 27-28 per cent. India is targeting $500 billion worth of exports by the end of 2014,” commerce secretary Rahul Khullar said.

The ministry is preparing a strategy paper aimed at doubling India’s exports by the end of 2014.

The country’s exports went up 32.5 per cent to $20.6 billion in January, led by a 70 per cent surge in engineering and a 36 per cent jump in petroleum and oil products. The exports increased 36.4 per cent to $22.5 billion in December.

In the April-January period, total exports reached $184.6 billion — just $15.4 billion short of the target of $200 billion for the fiscal. Exports increased 29.4 per cent in the first 10 months of 2010-11 against a whole year target of 15 per cent.

“On the whole, export performance is pretty good. My guess is by next month we will cross $200 billion and we should end this financial year at $220-225 billion,” Khullar said.

Exporters’ body Fieo said the country’s exports were increasing in the new markets of Latin America and Africa, along with the US and especially within Asia. “Exports are increasing because of market diversification. Asia itself has emerged as a big export destination,” Fieo president Ramu Deora said.

The recovery in major advanced economies, which had weakened during the second quarter of 2010, regained strength in the next quarter.

Deora said emerging markets in Asia, Latin America, Africa and West Asian countries would play an important role to achieve this ambitious target of $500 billion.

“Out of $500 billion exports, a major chunk will be contributed by Asia with a share of $230 billion with Asean alone importing more than $100 billion from India. Exports to Africa and Latin America will zoom,” he said.

The central Asian nations such as Kazakhstan and Uzbekistan and Commonwealth of Independent States (CIS) countries such as Russia and Ukraine would also contribute in increasing Indian exports.

However, exports to traditional destinations — the US and Europe —would go down to 15 per cent and 10 per cent, respectively, as growth in advance economies will taper off. At present, the US and the EU account for about 35 per cent of India’s exports.

A CII report said to make India’s exports achieve the $500 billion mark, more incentives need to be given to textiles, gems and jewellery, leather and engineering firms and also concentrate on the rapidly developing markets in Latin America, the Caribbean and Africa.

Imports grew 17.6 per cent to $273.6 billion in April-January period, resulting in a trade deficit of $89 billion. In January, the country imported goods worth $28.6 billion.

Khullar said exports of engineering products increased sharply during the first 10 months of this fiscal, mainly because of the huge demand for Indian products in South American countries, especially Columbia.

Exports of engineering products surged 70 per cent to $45 billion in April-January period. Other sectors that have helped in better-than-expected performance in export data are — gems and jewellery (9.3 per cent increase at $24.5 billion), petroleum and oil products (36 per cent up at $30 billion), cotton yarn and made-ups (52 per cent up at $4.7 billion).

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