Concerned over the sharp decline in exports in the last six months, the Commerce Ministry is carrying out a detailed analysis of key sectors such as engineering goods, petroleum products, pharmaceuticals and gems and jewellery to evaluate reasons for the fall.
A Commerce Ministry official told BusinessLine : “We want to see if the factors that have led to the drop in export of identified items are all due to global forces that are beyond our control, or if there is a possibility of Government intervention to sort out certain issues.”
The Ministry wants to keep a tab on possible import restrictions that other countries may be putting in place, look at newer markets that are showing promise and identify specific domestic problems that certain exporters may be facing.
Exports have been falling since December and were down 20 per cent in May this year. Although part of the fall is due to a drop in petroleum exports because of falling oil prices, many significant items in the export basket have witnessed a decline or slowdown.
Exports in fiscal 2014-15 declined 1.23 per cent to $310.5 billion.
“If we look at details related to sub-categories within a sector and export destinations, some interesting facts come up,” the official said.
For instance, the engineering goods sector, which was driving overall export growth till some time ago, posted a 10 per cent fall in exports in May. Automobiles, which form a considerable part of engineering goods export, posted a small decline of 2 per cent, mostly because of a sharp increase in demand from Sri Lanka, and to some extent from the UAE, Italy and Spain. Demand in major destinations such as Mexico and the UK fell sharply.
Sustaining demand “If there are certain markets that are showing good response, one could focus on them to ensure that demand continues to rise. On the other hand, in markets where there is an unusual drop in demand which could be traced to import restrictions imposed by the trading countries, India could take it up bilaterally,” the official said.
The Government had announced export incentives under the new Foreign Trade Policy (FTP) in April and may not come up with another incentive package immediately.
However, it would continue to take measures to reduce transaction costs and time.
“The number of mandatory documents for exports and imports was recently brought down to three, from seven. The Directorate-General of Foreign Trade is working with the Customs Department to cut down on paper-work further,” he said.
The Commerce Ministry is already in touch with State governments urging them to take measures to improve export infrastructure as more funds have been allocated to them this year under the export infrastructure upgradation scheme.