Indian engineering exports may decline by around USD 8 billion in the current fiscal to USD 62 billion due to a sharp erosion in commodity prices, a trade body said.
The Engineering Exports Promotion Council (EEPC) said that despite a 7-8 per cent depreciation in rupee against dollar during 2015, shipments in 2015-16 will be confined to USD 60-62 billion.
In 2014-15, engineering exports had aggregated over USD 70 billion.
Engineering exports, which account for about 23 per cent of the country’s total merchandise exports, dropped 14.4 per cent to USD 39.85 billion during April-November from USD 46.55 billion during the same period last year.
“There is no question of engineering sector reaching the last year’s level of USD 70 billion in FY16. We may end the year with shipments around USD 60-62 billion with a hope that things start changing for better in the next financial year,” EEPC India Chairman TS Bhasin said.
Primary iron and steel, along with all non-ferrous metals and products, which contribute the maximum to the engineering export basket, saw a real bloodbath in the export market, leaving absolutely no pricing power with the producers, he said.
The primary iron and steel exports have fallen by more than 28 per cent in November 2015 against the corresponding month in 2014, while the fall has been over 40 per cent for the products segment.
For the April-November period, the aggregate drop in these two areas has been over 25 per cent.
“All non ferrous metals and products, barring tin and products made of tin, witnessed deterioration in exports during November 2015. Another segment which has been a huge de-growth during the year is the railways transport,” Bhasin said.
“Exports in this segment (railway transport) declined by 44 per cent for the April-November period. Be it auto and auto components, air conditioners and refrigerators or medical or scientific instruments, there has been a sharp fall in the export consignments, dealing a deadly blow to the engineering sectors,” Bhasin said.
Bhasin further said that the situation has worsened by excessive protection given by the government to domestic large-scale steel firms by way of safeguard duty and anti-dumping duty.
“There is also a proposal to fix a minimum import price. All these measures are lopsided and overlook interest 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,” he added.
As for the export destinations, out of the top 25 countries, 20 recorded negative growth in the first eight months of the current financial year.
All top destinations, including the US, UAE, UK, China, Germany, South Africa and Singapore, have slipped on the shipments front.
Out of 221 destinations for export of Indian engineering goods, the top 25 nations account for 72.9 per cent of the total during April-November. The growth rate in the top 25 countries during the period, taken together, recorded a fall in exports by 14.1 per cent.
It has been for 12 months a row that India’s overall merchandise exports have been falling, with November witnessing one of the worst performances with a 29 per cent drop.
For the nine months of 2015-16, the country’s total exports have declined by 18.46 per cent to USD 174.31 billion from USD 213 billion for the same period last year, EEPC said.