EMBARGOED FOR PUBLICATION ON MONDAY 30th MARCH 2015

EMBARGOED FOR PUBLICATION ON MONDAY 30th MARCH 2015

EMBARGOED FOR PUBLICATION ON MONDAY 30th MARCH 2015

 

No.PR-221
March 28, 2015
New Delhi
 

EMBARGOED FOR PUBLICATION ON MONDAY 30th MARCH 2015
 

Exporter’s Survey Depicts Gloomy Picture: Order Books Decline by 20%: PHD Chamber
 

Exporters are facing severe slowdown in order books because of weakening competitiveness in foreign markets and challenging business environment at domestic front, said a survey of exporters conducted by PHD Research Bureau of PHD Chamber of Commerce and Industry.
 

A survey was conducted among 133 exporters including small, medium and large enterprises during the months of February and March 2015.
 

Majority of the exporters (around 63%) have reported a slowdown in their exports because of a dull business environment in the domestic and foreign markets. Not only the volumes but also the momentum of exports has been lost, reported the exporters.
 

The exporters were of the view that the incentive structure should be straight forward, far reaching and hassle free to enhance export competitiveness in the international markets. They said that due to both internal external factors their exports had fallen and their order books have seen a decline by 20% for the coming times.
 

In terms of competitiveness in the world markets it was reported that India has advantage in some products and has the capacity to be at par with Asian counties. However, the recent scenario is different and India is far behind its competitors viz- China and other major East Asian economies, said the survey
 

Despite the fact that there has been recovery in the US market, exports have not been catching at the earlier fast pace. High significance of exports to the European markets, which still has not recovered from recession, makes the situation unfavorable for Indian exporters.  Even though there is a hope of recovery in the US market but weakening prosperity has been a major stumbling block to regain export momentum. 
 

India's direction of exports

Sr. No

Regions/Country

% Share

 
 
       

1

Europe

19

 

2

America

17

 

2

Asia

49

 

3

Africa

10

 

4

CIS & Baltics

01

 

5

Unspecified region

04

 

Total

100

 

Source : PHD Research Bureau, compiled from Ministry of Commerce and Industry

Note: Asia also includes Middle East Countries

 

 

 

 

 

 

The strengthening of the rupee has also impacted Indian exports adversely in the recent past was the view of some respondents (around 25%).
 

Further, the exporters said that because China is producing and exporting goods at cheaper prices, its goods are being preferred more in the world markets than Indian goods. It may be mentioned that demand may not be a major problem in the international market as growth of Chinese exports grew by 15 % during the January-February period and posted a surplus of US$121bn. While, India’s exports posted a negative growth of  (-) 13%  with a trade deficit of around (-)US$15bn during the same period, said the survey study.
 

Among the internal factors, exporters reported to have been badly hit by high operational and transactional costs in doing business. They reported that the ease of doing business in India is a far reaching reality because of complicated and time consuming procedures.
 

Exporters reported complex tax structure as another bottleneck for the efficiency and promotion of exports. While the process of importing goods in India is a simpler procedure in terms of both cost and time taken, exporting goods from India usually takes 1-3 days after being cleared at the customs and other inspections.
 

But sourcing of raw materials from the foreign markets still suffer from multiple taxes viz. basic custom duty (BCD), countervailing duty (CVD), Special Additional Duty (SAD) etc. Moreover, CVD and SAD can be taken the CENVAT credit of but BCD cannot be taken credit of, thus creeps in the final cost.
 

In order to overcome these problems Goods and Service Tax act should be implemented at the earliest so as to overcome the problem of several taxes on exporters in India, said the exporters.
 

Exporters felt that, custom officers should be facilitator not adversarial: queries on more than decade old cases create hassles in doing business. Officers must be accountable for picking up frivolous cases.
 

Despite the reduction in custom procedures, things are still challenging at ports where labour laws and tedious transportation processes are impacting exporters as usual. Many exporters have also particularly reported that to get a GSP issued from the concerned authorities is still a lengthy process.
 

We believe the reforms process will continue to improve the ease of doing business and to foster a higher and sustainable growth trajectory in the coming times. Lots need to be done at the ground level where there is no visible effect so far of dynamic reforms undertaken at the broader level, said Mr. Alok B Shriram, President PHD Chamber of Commerce & Industry
 

Dynamic reforms process must be implemented from the grass-root level to experience the wonderful outcomes, he said
 

Also they were unable to compete in the world markets as there was difficulty in procuring loans due to high interest rates at the domestic front and stringent overseas trade finance procedures.
 

A high rate of interest on loans at the rate of 11% in India compared to a 3-4% in China is stated to be responsible for such a disparity in terms of global competitiveness.
 

The strengthening of the rupee has also impacted Indian exports adversely, was the view of some respondents.
 

Some respondents also felt that the government was not providing effective incentives to the exporters and even if there were any, there was a lot of difficulty in availing and claiming those incentives.
 

The exporters reported that their balance sheets have been affected by a slowdown in exports. They are hopefully waiting for the foreign trade policy which is long due since last year.
 

The value of exports for the period April-February 2014-15 is recorded at US$287 billion. For the same period last year the cumulative value of exports stood at around US$ 284 billion, thus, a growth of 0.88% in dollar terms has been registered so far.
 

The government needs to instill confidence among exporters by creating hassle free business environment, simplification of policies and procedures, adequate financial support and awareness about the dynamic global markets to explore the export potential of our country and to achieve the desired growth momentum in exports, said Mr. Shriram
 

ENDS

Koteshwar Prasad Dobhal
Consultant (PR)