KOLKATA: Exports of India’s engineering products may slip to about $60 billion in the current fiscal from more than $70 billion last year despite 7-8 per cent depreciation of the rupee against the US dollar, according to an EEPC India review, which blamed the downturn on the sharp erosion in commodity prices worldwide.
Engineering products account for about 23 per cent of India’s total merchandise exports. During April-November, exports fell 14.4 per cent to $39.85 billion from $46.55 billion a year ago. In November, exports of 26 out of 33 engineering segments showed a negative trend.
“There is no question of engineering sector reaching last year’s level of $70 billion in 2015-16. We may end the year with shipments of around $60-62 billion, with a hope that things start changing for the better in the next financial year,” said TS Bhasin, chairman of EEPC India (formerly Engineering Export Promotion Council).
Primary iron and steel along with non-ferrous metals and products contribute the maximum to the engineering export basket. “These segments saw a real bloodbath in the export market, leaving absolutely no pricing power with the producers or suppliers,” said Bhasin.
Exports of primary iron and steel fell more than 28 per cent in November, while the fall was over 40 per cent for the products segment. The aggregate drop in these two areas was over 25 per cent during April-November.
All non-ferrous metals and products barring tin and products made of tin witnessed deterioration in exports during November. Another segment which has been hit badly is railways transport. Exports in this segment declined 44 per cent during April-November. Auto and auto components, air-conditioners and refrigerators, medical and scientific instruments also saw a sharp fall.
The situation has worsened due to excessive protection given by the government to the domestic large-scale steel firms by way of safeguard duty and anti-dumping duty, according to EEPC India. “There is also a proposal to fix a minimum import price. All these measures are lopsided and overlook interests of the small and medium enterprises which are then made to buy their raw material at higher costs, losing competitive edge in the tough international market,” the review said.
The apex engineering exporters’ organisation has taken up the issue with the ministries of commerce and finance, albeit without much success.
Of the top 25 export destinations, 20 countries recorded negative growth in the first eight months of the current fiscal. Shipments to all major destinations including the US, UAE, UK, China, Germany, South Africa and Singapore saw a decline.
India’s overall merchandise exports have now fallen for 12 months in a row, with November witnessing one of the worst performances, with a 29 per cent drop. During April-November, exports fell 18.46 per cent to $174.31 billion from $213 billion a year ago.
