Export prospects

Export prospects

Once bitten twice shy. The commerce minister abjured announcing the mandatory export target with the exim policy for 1999-2000. Last year, export growth in US dollar terms was 3.7 per cent against the targeted 20 per cent. The shortfall came not from domestic demand's pull, but lack of global demand, reflected in a decline in unit price realisation. In any case, to arrive at even a modest target it is necessary to get a hang of trading conditions abroad. Discussions with the country's export promotion councils, deferred by no confidence in the government, are to be resumed. But judging by business confidence surveys, export growth target is likely to be around 6 per cent. This shows a lack of ambition, in the light of the engineering export growth target of 9.75 per cent. But engineering exports, projected at $4.5 billion in 1999-2000, are hardly bold. These fell by over 10 per cent to $4.1 billion in 1998-99. The striving is to touch 1997-98's billion engineering exports of $4.6. If exports that sufferedsetbacks regain lost ground, and those that made headway sustain momentum, economic gain in terms of increased utilisation of capacity will be substantial. Together with rise in domestic demand (following a rise in agro income), this year could witness a turnaround.

Indian industry has yet to realise the importance of exports; investments are geared for home market. Moreover, export performance improves when manufactures fare well at home. For exempting export profits from tax, the proportion of export sales to total sales is taken into account. Rising domestic sales boost tax-exempt export profits. A domestic economic turnaround is thus a must for export growth. The expected growth in the domestic market should see a corresponding rise in exports.

Top

Printer-friendly page