The current financial year is likely to be bitter for the domestic exporting community than the previous one, as overseas sales are projected to fall 2.2%. In 2008-09, the country managed to achieve export growth of 3.4%, lower than in 2007-08, due to reduced demand from developed economies, mainly the United States and European Union.
The global economy is likely to see a negative growth of 2.7% in 2009. The economies of US and EU, which account for around 30% exports from India, would shrink 4% and 4.1%, respectively in 2009, United Nations Conference on Trade and Development?s (Unctad) India Project has estimated in a study named ?Impact of Global Slowdown on India?s Exports and Employment?.
As a ramification of export shrinkage, 1.32 million people employed in export-oriented sectors are expected to lose their job as compared to 1.16 million during 2008-09. Those working in textiles, gems and jewellery, ore and minerals, petroleum and chemical sectors be hit the hardest, the study stated.
Exports of petroleum products are likely to fall the maximum, 11.8%, during the fiscal. Gems and jewellery, ore and minerals, chemicals and textiles would follow with a drop of 11.1%, 4.9%, 4.3% and 3.6%, respectively.
However, the plantation, agriculture and engineering sectors, with respective growth of 14.2% and 1.5% and 0.4%, would prevent a further fall in exports. Also, the net employment loss would also be reduced to 0.7 million as these sectors would recruit more people.
In 2008-09, the country could not achieve the target of $170 billion, which was revised downward from $200 billion in the light of weak global economy. The final figure for the year was $168.7 billion, a growth of 3.4% over the previous year.
The overall situation would improve only in 2010-11, when exports are expected to grow 8.3%. ?In 2010-11, about 5.22 million jobs could be created. No job losses are expected as all sectors are expected to experience positive export growth,? the study said.
The study said to mitigate the impact of global slowdown on India’s exports, policy intervention like diversification of exports to new geographical destinations and new products, simplification in customs procedures for reducing transaction costs are required.
?Around 958 products have been identified where India has the potential to increase its exports. These include organic chemicals, cotton, iron and steel, apparel and man-made staple fibres,? it said. India may be able to increase its exports by almost 21% if new markets are explored for these commodities, Unctad added.
Despite targeted efforts by the government for seeking new destinations for exports, US and EU continue to be the main markets, the body said. ?It is likely that regions like China, West Asia, Asean, Australia and Brazil witness faster recovery than other economies. They can provide viable and sustainable alternate markets for reducing India’s overwhelming reliance on the EU and US for its exports,? the study stated.