Bikky Khosla | 31 Dec, 2013
Another year is over and a fresh one is dawning -- what is
the road ahead for our small and medium exporters? The future, of course, is
difficult to predict, but we can perhaps find some important clues in the
current performance indicators of the economy -- both on the domestic and global
fronts -- which is performing far better than what it did at the beginning of
2013, and most importantly in the encouraging data points that are gradually
coming from some of our major export markets including the US, Europe and
Japan.
According to the World Trade Organization, global trade
growth in 2014 is likely to be 4.5 percent against an estimated 2.5 percent in
2013. It adds that the European sovereign debt crisis has eased significantly
since last year, unemployment in the US
has fallen to 7.3 percent from a post-crisis high of 10 percent, Japan's GDP growth has accelerated and China's
Industrial production may be regaining some of its dynamism. All these are good
signs for the global economy, and I expect this will gradually lead to higher
exports by us to these markets.
As far as our export is concerned, 2013 has remained a mixed
year. The first half remained dull while from July to October exports
registered double-digit growth in each month although in November the growth
slowed down to 5.86 percent at $23.2 billion against a two-year high growth of
13.47 percent at $27.2 billion in the previous month. These figures raise hopes
of better days ahead. I think our export sector will be able to build on this
momentum, but to what extent will depend on the government's support.
Some recent measures by the Centre like expansion of the
list of items under the duty drawback scheme and extension of the interest subvention
scheme to boost textile and engineering exports are positive, but still most of
the major problems of the export sector are left almost unaddressed -- little is
done to improve the export infrastructure, lower the cost of credit and
increase credit availability, bring down transaction costs and bureaucratic
hurdles or to boost manufacturing exports. In addition, high inflation has
resulted in higher input costs as well as higher interest rates due to RBI rate
hikes.
Recently, the government has expressed confidence that the
export target of $325 billion for the current financial year would be met, but
at this moment there should be no place for complacency. Instead focus should
be given on strengthening the economy that has just managed to get out of the
labyrinth of current account deficit and rupee depreciation and is still
carrying the burden of high inflation. Our policies need to be shaped towards
increasing our exports -- only this will help define the Indian economy in the
coming years.
Wish you a very happy and prosperous New Year.
