THIRUVANANTHAPURAM: At a time when general economic principles are challenged, this may not appear bizarre: The Engineering Export Promotion
Council, established in 1955 under the sponsorship of the commerce ministry for the avowed purpose of export promotion of engineering goods, projects and services from India, is asking its members to tap the opportunities in the domestic market.
"There is no contradiction in that", explains EEPC chairman Aman Chadha, who says, "Our core objective is export promotion, but it is fundamental that we ensure the welfare of our members. The need of the hour, after all, is to survive".
EEPC officials told ET that in retrospect it appears good that we were not as export-oriented as China, as a result of which we are better insulated from the ongoing financial turmoil across the world.
With the world economy contracting, China's exports in January dropped 17.5% from a year earlier, marking the biggest drop in 10 years, according to latest reports.
EEPC feels that India's engineering sector exports may cross last year's $ 33 billion by about 15%, but expects a major impact of the slowdown to be felt in the next fiscal.
EEPC has carried out a sample survey of 29 member companies from the small and medium scale sectors, manufacturing 50 product lines and employing 8,000 direct and indirect employees, and the results are striking.
The survey results show that the global crisis has affected indirect employees the most, with 67% of the indirect employees in these companies likely to lose their jobs by end June. The results also state that the total workforce of these 29 companies could fall by 37% by June 30, compared to the August 31, 2008 levels.
Mr Chadha said EEPC had brought this "precarious situation" to the notice of the government and suggested a range of measures to lessen the employment shock. Suggestions from the council include speeding up excise, service tax and VAT refunds for exporters, reduction in interest rate on working capital, and export credit as well as extension of interest subvention to merchant exporters as well as urban co-operative banks.
Besides its advice to member companies to look more seriously at the domestic market, EEPC has also suggested that they consider moving up the value chain. To complement this from the government's side, the council has proposed fiscal incentives to boost capital investment and R & D expenditure in engineering companies.
Source : The Economic Times