India’s exports of engineering goods has reported a sharp month-on-month fall of 14.60 per cent in November as compared to the previous month with some of the key markets like the US not supporting the sharp recovery of shipments witnessed in the earlier months, according to the engineering exporters’ body EEPC India, which has sought support from the government.
Though engineering exports show an annualised increase of 14.72 per cent in November 2013 over the corresponding month of 2012, "what is causing more concern is that they have declined month on month as compared to October this year, raising doubts whether recovery which began in the second quarter of this fiscal can be sustained,'' said EEPC India chairman Anupam Shah said.
Liquidity continues to be a big issue for exports. Pending claims of refund of service tax, duty drawback and rebate claims continue to affect exports. At present, out of 118 ports, drawback claims of Rs 4,821 crore are pending in 103 ports, against normal pendency of Rs 1,000 crore or less.
In the Chennai seaport alone, drawback claims of Rs 802 crore are pending, according to Rafeeque Ahmed, president of the Federation of Indian Export Organisations (FIEO).
Ajay Sahai, CEO of FIEO, pointed out that though the general forecast is that 2014 would be a better year than 2013, the global situation continues to be very fluid.
"There are few green shoots and the situation is bound to continue to remain uncertain in 2014. The United States has posted recovery with unemployment rate of less than 7 per cent and increase in consumer spending, but the housing market and business spending have slowed down,'' he said.
He pointed out that the EU is still trying to come "out of the woods'' and its GDP grew by 0.1 per cent in third quarter over the previous quarter. The FIEO has said they are concerned with unstability in West Asia and North Africa and legal disputes with many governments of Latin America. The foreign exchange of Argentina has also come down to $30 billion and Venezuela has imposed many restrictions on its current and capital account, said Ahmed.
Slide in gems & jewellery, petro products
The engineering export basket aggregated $4.78 billion in November, as compared to $5.6 billion last year. Incidentally, though exports had shown an increase in October, the momentum could not be maintained in November, given the slide in several key areas like gems and jewellery and petroleum products.
The officials said the trend in engineering exports is similar to the country’s overall exports story. In November, the growth of India’s total exports of merchandise goods eased to a five month low of 5.86 per cent to $24.6 billion.
"All the three top contributors to the Indian exports basket could not keep pace in November. The performance was not consistent with the previous months in regard to petroleum goods, gems and jewellery and engineering goods," Shah said, raising concerns about the erratic graph.
Shipments to US down
Moreover, shipments to the key market US declined year on year in November 2013, to $475 million from $514 million in the corresponding month last year. Likewise the trend has not been very encouraging in some of the important markets of Europe. For instance, despatches to UK dropped to $200 million in November, from $287 million a year ago.
EEPC has pointed out that though substantive policy action may not be possible at this stage, administrative actions to prevent delays in ports, procedural bottlenecks, the release of drawback refunds needed to be undertaken on a war footing.