MUMBAI : United Arab Emirates has become the top destination for Indian exports in fiscal 2009 (April-March), displacing the US from the No 1 rank on account of a sharp rise in gems and jewellery exports.
The country’s total exports to the UAE grew by a phenomenal 53% to $23.92 billion in FY09 from $15.63 billion in FY08 even as exports to the US remained almost flat at $20.82 billion, according to the latest commerce ministry data. Notably, exports to the Gulf country were even higher than the combined exports to China and Hong Kong, which added up to about $16 billion during the fiscal.
Trade experts such as Ajai Sahai, director general, Federation of Indian Export Organisations (Fieo) explained that exports to other countries with which India does not enjoy comfortable trade relations are re-routed through Dubai. For instance, Pakistan has not conferred most favoured nation status on India which restricts free growth in trade with the country. As a result, exports to such countries are re-routed through Dubai, said Mr Sahai.
According to local media reports in Dubai, India accounted for the largest chunk for re-exports from Dubai in 2008 with exports worth about $10 billion during the year. “This is remarkable in view of the slowdown in our overall export growth last year,” said Amit Mitra, secretary general, Ficci, the country’s leading trade body.
He added that an analysis by Ficci shows that the robust growth came about mainly because of a phenomenal rise in exports of gems and jewellery — a 163% increase from $4 billion in FY08 to $10.6 billion in FY09. Other high growth items included electronic goods (101%), manufactures of metals (44%), primary and semi-finished iron & steel (42%) and ready-made garments (29%).
“Though traditionally the US has been a major export destination for gems and jewellery, the recession in that country has not only impacted demand there, but also created payment related issues. As a result, exporters have focused on the Gulf market since it is perceived to be safer and the exporter is assured of payments,” said Rajesh Mehta, chairman, Rajesh Exports, a top exporter of gold jewellery from the country.
Also having a number a free trade zones with attendant tax benefits makes UAE an ideal location for traders to strike deals from there. Typically, an Indian exporter who sets up shop in Dubai, a well-known emirate of the UAE, does not have to pay any customs duty for importing goods into the country, nor any income tax on the export proceeds.
Also, exports are re-routed from the UAE to other Middle-East and African countries where there are credibility or other payment-related issues such as non-acceptance of Lcs issued by some African countries’ banks in India and also other procedural issues, said an exporter on condition of anonymity.
Significantly, the UAE’s share in India’s global exports improved from less than 10% in FY08 to over 13% in FY09, while that of the US correspondingly dipped from 12.7% to 11.4%.
Source : The Economic Times