Giving the exports sector a leg up will be one of the major responsibilities of the new UPA Government. Exports fell by as much as 33 per cent in April, the seventh consecutive month that it has fallen. The decline is expected to continue for a few months more, which means that the 2009-10 export performance will fall below the $168.7 billion achieved in 2008-09, which itself was a paltry 3.4 per cent improvement over the previous year.
Both short and long-term measures will have to be taken to strengthen the export sector, the immediate task being to help exporters operating in the small and medium enterprises (SME) segment reeling under the impact of the global recession. Take the engineering goods sector where, the downturn has hit such units particularly hard with a large number running below capacity resulting in 5,00,000 jobs being lost over the past few months. For its part, the textiles sector may see much greater export-induced erosion in employment with unofficial estimates putting job losses at around a million, the official estimate being between 3,00,000 and 5,00,000. The seriousness of the situation in the textiles and garments sector cannot be over-emphasised in view of the fact that the sector employs the largest number of people after agriculture and about half its total production is geared to the export market, the bulk of the supplies going to recession-hit US and EU. Tea exports too have taken a severe beating during the current calendar year (a drop of more than 23 per cent in the first quarter), the recession and a shortfall in domestic output being the main reasons behind the decline.
Clearly, in a market environment where competition from China, Bangladesh and South-east Asia has increased manifold, the immediate need is to extend emergency assistance to exporters so that they can tide over their recession-generated problems and, basically, be able to survive so that they can live to fight another day. Specific measures which could help exporters in this direction are the extension of interest rate subvention, continuation of export duty reimbursement schemes and widening of the coverage of the focus-product and focus-market programmes. These measures should be taken urgently in view of the fact that competing countries are extending substantial assistance to their own exporters. To make matters worse for the Indian exporter, the rupee has been appreciating versus the dollar — it is up 8.5 per cent over the last couple of months — thereby making Indian products even less competitive in the international market.
Source : Business Line