India's export falling by 10% in EU due to it's sovereign crisis: ASSOCHAM.

Export target of $ 200 billion for 2010-11 set by government could be at stake if Euro Zone sovereign crisis are not prevented from spreading to larger part of European Union in the absence of which India’s exports could witness a slump of close to 10% in the block in first quarter of current fiscal, says an analysis carried out by The Associated Chambers of Commerce and Industry of India (ASSOCHAM).


The preliminary analysis on Exports Vs Euro Zone Crisis done under aegis of ASSOCHAM points out that the government set modest export target for current fiscal in view of saturation in economies of scale without anticipating sovereign debt crisis of leading European economies which account for 26% of India’s total exports.


The export products which are likely to be adversely affected include in areas of engineering, readymade garments, yarn, chemicals, oil seeds, electrical goods and leather, said ASSOCHAM Secretary General, Mr D S Rawat while releasing it’s assessment here today.


According to ASSOCHAM, the exports which are unlikely to be adversely affected even if European crisis persist could be gems and jewellery, marine products, tea, fruit and vegetables, tobacco and plastic products.  Iron ore exports although limited to European markets would continue to grow in countries like China and others.


According to estimates of ASSOCHAM, nearly 10-12% slump is foreseen in export proceeds of India in European markets particularly that of Greek, Portugal and even Spain in the first quarter of current fiscal.


However, as the European economies start absorbing, benefits of economic bailout, their economies will create space for Indian products most of which would be traditional and slowly and gradually make up for the lost time.  Its impact would become visible only in latter part of second quarter of fiscal 2010-11 and at the most in the beginning of third quarter of ongoing fiscal, pointed out Mr. Rawat.


The ASSOCHAM, however, is optimistic that Indian exports by and large would gain in from sectors like pharmaceuticals and engineering.  Demand for Indian pharma products including gems and jewellery would continue to remains stable in most of European economies barring Greece, Portugal and Spain.


Orders booked in advance even from these countries for sourcing such products from India are unlikely to witness cancellation, although their payments schedule will have to be restructured, points out ASSOCHAM assessment.


It may be mentioned that India’s export proceeds were measured at $ 176.7 billion in fiscal 2009-10 as against it’s imports of close to $ 287 billion.  The ASSOCHAM in its preliminary assessment forecasts exports of close to $192 billion and imports touching close to $ 300 billion.


Imports would grow especially most of capital goods, components and power equipment as India’s economic expansion will continue to go on and it will remain a centre for larger economic activities.  This will spur up demand and sustain the growth momentum.


However, on the external front, India’s economic engagements would be in for some stake as recovery will become fully pronounced by end of 2011.  This is also evident from the fact that India’s recovery on export front started happening from November 2009 which further picked up in the month of March 2010 and the momentum is likely to be maintained accepting a brief pause as economies in Europe are facing turbulent times.

Source : indiainfoline.com