The positive year-on-year growth in exports seen for each month from November 2009 is doubtless a sign of export revival and it now seems the trend would be sustained in the current fiscal, commerce secretary Rahul Khullar said in an interview with FE. Khullar?s comments are a cause for optimism given that cumulative exports of $153 billion between April 2009 and February 2010 (latest available) were still 11.3% lower than the year-ago period. The government appears to believe there is some real shift in demand, over the base effect that contributed to the positive monthly growth figures in recent months.
The predictions of a world trade expansion, apart from the exporters? animal spirits and the government?s sops, are a strong reason for the relatively sanguine outlook now.
Khullar said: ?The WTO believes that global trade will expand by 9-11% in 2010 (calendar year). It (the projection) could mean different things for different countries.? He said the US econ- omy is expected to grow 2-2.5% this fiscal and the EU by 1-1.5%. The EU is India?s largest trading partner and the US, the fourth largest.
?The trend (of positive year-on-year growth in exports) must have continued into March and there are signs that it would continue for the rest of the year (fiscal year). That?s the real good thing,? he said.
After 13 months of negative year-on-year growth, exports showed marginal signs of improvement from October-November 2009.
At that point, the commerce ministry was still hesitant to call the positive figures a trend.
Khullar, however, said the growth in exports was still restricted to a few sectors, with engineering goods and basic chemicals still reeling under pressure from the contraction of Western markets. ?The engineering goods sector contributes a huge chunk to our exports. It is clobbered. It is really in a bad shape,? he said. At the peak of recession, exports of gems & jewellery, marine products and textiles had dipped sharply. ?These sectors are very labour-intensive. Gems & jewellery had been hit badly but over the last six months they have shown rapid growth. Exports of man-made fibres have shown improvement,? he said. Though handicrafts exports continue to be hit, it has no major deleterious impact on employment as the domestic market is the mainstay of these craftsmen. It is the aggregate demand that matters, he said.
Reacting sharply to the EU?s move to initiate an anti-subsidy probe into steel imports from India, Khullar said the fact of the matter is that the developed world is no longer an efficient producer of steel. ?When prices are in the dumps, nobody complains. If you say you believe in competition, you will really have to live with it,? Khullar said.
Following reports of the EU probe, senior government officials here have hinted that India is in the midst of collating information to refute the charge by Europe. On March 31 commerce minister Anand Sharma had announced additional incentives for exporters of engineering goods, garments and chemicals, for six months at a cost of Rs 650 crore.