Engineering exports may fall short by $10-12 billion of the Government-targeted shipment of $72 billion set for this fiscal. Last fiscal, it was at $60 billion, registering a growth of 85 per cent from the previous fiscal.
Mr Aman Chadha, Chairman, Engineering Export Promotion Council, said the Government has conveyed that engineering exports have grown 20 per cent to $54 billion up to February.
“Considering that we log $5-6 billion exports a month, we are unlikely to achieve the target set by the Government. Our exports lagged largely due to the sluggish demand in traditional markets such as US and Europe, which constitute 40 per cent of our exports,” he added.
Engineering exports include transport equipment, capital goods, other machinery equipment and light engineering products such as castings, forgings and fasteners. Engineering exports were expected to account for about one-fourth of the country's total merchandise exports for this fiscal.
BUDGET LET DOWN
Exports from this segment started declining since June and registered a fall of 37 per cent to $3.8 billion in November. It turned the corner in the following month to touch $4.6 billion. In January and February, exports reached $4.73 billion and $4.79 billion, respectively.
Forecasting another challenging year ahead, Mr Chadha said the Council recommendation for a technology upgradation fund and rise in interest rate subvention from two to four per cent have been turned down in the Budget.
In fact, the cost of borrowing for export-oriented units will go up as the Government has done away with the prevailing two per cent subvention from April. The general expectation that banks will cut lending rates would have led to removal of this subvention, he said.
“Even if the banks cut lending rates, most of the micro, small and medium enterprises, which contribute a major chunk of engineering exports, will not benefit much. As bank lending rates depend on credit rating, MSMEs will definitely not top the pecking order,” he added. The cost of production will go up further if petrol and diesel prices are increased.