NEW DELHI: Indian exports are likely to miss the target of $ 200 bn by 20 per cent this fiscal, as prevailing domestic and global economic conditions have severely affected shipments, a study said.
Besides the slowdown syndrome, other reasons which would affect exports include rising ocean freight rates and certain export restrictions imposed by the government, industry body Assocham said in its study on "Realistic Exports Vs The Targeted One".
"Seven key export segments such as textiles, apparel, gems and jewellery, diamonds, brass-ware, handicrafts and leather are already reeling under recessionary trends," it said.
The chamber anticipates a shortfall of about USD 40 bn in exports this current fiscal.
"Indian exports are likely to witness a shortfall of about 20 per cent against their target as prevailing domestic economic conditions have caused a severe dampening effect on potential export segments of the Indian economy," it said.
In the first two months of this fiscal, merchandise exports do not bring in as much foreign exchange as those brought in by high-value added products such as ready-made garments, diamonds, jewellery, gems, carpets, handicrafts and brass-ware, an Assocham spokesman said.
In September, India's exports registered a growth of mere 10.4 per cent against 26.9 per cent in August.
Other factors that have eroded costs and competitiveness of Indian exports include rising input costs, which are not falling, and power and infrastructure remain a problem for the manufacturing sector.
As a result, India is still far behind on logistics and the transaction cost of exports have already risen around 20 per cent, Assocham said.
The country is facing stiff competition on the exports front from neighbouring China as well as from Bangladesh, Sri Lanka, Pakistan and Bhutan.
As a result, its traditional exports have suffered in the past, which will continue to suffer even in the future until exporters make amends to their products by technology infusion.
Tuesday, November 11, 2008
Exports plunge to five-year low in October
NEW DELHI: In a clear signal of the debilitating impact of the global economic crisis on India’s trade and employment prospects, merchandise exports dipped 15% and slipped into negative territory during October 2008 compared to the same month in 2007. The government expects the situation to continue or even deteriorate in the coming months. This is the first time in five years that India’s exports have witnessed a decline.
According to preliminary estimates by the commerce department, the decline in exports in October is sharper at 20% if petroleum — the only major sector registering an increase in exports during the month — is excluded from the calculation.
Director general of foreign trade RS Gujral said the export figures in September and October point to the difficult times ahead for exporters over the next year. Reduction of demand in the US and western Europe, pressure on prices and problems of credit and credibility will plague exporters in the months to come, he said. The DGFT admitted that the export target of $200 billion was unlikely to be met. “I personally believe that it is unlikely that the export target will be met,” he said.
Labour-intensive sectors like textiles, garments, handicrafts, certain segments of leather and gems & jewellery are the ones which have been hit the most by the slowdown in the West, he said. “Exports from all sectors, except petroleum and two minor sectors, declined in October. The employment-generating sectors have been hit the most,” Mr Gujaral said, adding that there could be job-cuts in such sectors.
When asked about the measures the government was contemplating to help exporters tide over the crisis, the DGFT said the high-level committee set up by the prime minister was closely monitoring the situation and would recommend suitable measures. “Specific areas, like labour-intensive export sectors, are likely to be identified and measures to address the credit problems of such sectors could be taken,” he said. According to Mr Gujral, the government has realised that measures taken by RBI to address the credit crunch, like reducing the cash reserve ratio (CRR) of banks, has not percolated down to exporters.
While the DGFT did not disclose the actual export figures, a 15% decline over $14.53 billion of exports in October 2007 would mean exports of around $ 12 billion in October 2008.
Average export growth in April-October 2008 is estimated to decelerate to 21.5% from a robust 30.8% in the first six months of the fiscal.
According to preliminary estimates by the commerce department, the decline in exports in October is sharper at 20% if petroleum — the only major sector registering an increase in exports during the month — is excluded from the calculation.
Director general of foreign trade RS Gujral said the export figures in September and October point to the difficult times ahead for exporters over the next year. Reduction of demand in the US and western Europe, pressure on prices and problems of credit and credibility will plague exporters in the months to come, he said. The DGFT admitted that the export target of $200 billion was unlikely to be met. “I personally believe that it is unlikely that the export target will be met,” he said.
Labour-intensive sectors like textiles, garments, handicrafts, certain segments of leather and gems & jewellery are the ones which have been hit the most by the slowdown in the West, he said. “Exports from all sectors, except petroleum and two minor sectors, declined in October. The employment-generating sectors have been hit the most,” Mr Gujaral said, adding that there could be job-cuts in such sectors.
When asked about the measures the government was contemplating to help exporters tide over the crisis, the DGFT said the high-level committee set up by the prime minister was closely monitoring the situation and would recommend suitable measures. “Specific areas, like labour-intensive export sectors, are likely to be identified and measures to address the credit problems of such sectors could be taken,” he said. According to Mr Gujral, the government has realised that measures taken by RBI to address the credit crunch, like reducing the cash reserve ratio (CRR) of banks, has not percolated down to exporters.
While the DGFT did not disclose the actual export figures, a 15% decline over $14.53 billion of exports in October 2007 would mean exports of around $ 12 billion in October 2008.
Average export growth in April-October 2008 is estimated to decelerate to 21.5% from a robust 30.8% in the first six months of the fiscal.
After hefty payout, BSE shareholders to get 12:1 bonus
After pocketing a hefty 3000% dividend in 2007-08, shareholders of the Bombay Stock Exchange (BSE) are being treated to some more largesse this time in the form of a bonus issue. According to reliable sources, the BSE board at its meeting on Saturday has decided to offer 12 bonus shares for very share held by shareholders.
Though the bonus issue is in line with brokers’ expectations, the move is seen as the first step towards eventual listing of the exchange’s shares. BSE is required to enhance its capital base significantly from the current level for listing purpose.
Post-bonus, the exchange’s equity capital would increase from the current Rs 78 lakh to Rs 10 crore, which is the limit applicable to companies seeking listing on the National Stock Exchange (NSE). The minimum paid-up capital requirement for BSE listing is Rs 3 crore.
Confirming the bonus issue, a broker shareholder said: “The move is positive in the sense that we are a step closer towards listing. But, we are more concerned about broader issues relating to stock market turmoil and the consequent loss in business, which have badly affected our prospects.”
In the last AGM, shareholders had insisted on speedy listing of BSE’s shares, which has been delayed by several months. The exchange was planning to get its shares listed by the end of the last fiscal. By increasing capital through bonus issue, the corporatised and demutualised exchange would fulfil the listing criteria and would be able to take the process further.
Sources say BSE is looking to list shares with or without initial public offering (IPO). Some brokers feel the cash-rich exchange does not need more funds and so could seek Sebi exemption from floating an IPO. As on March 31 2008, its reserves stood over Rs 1,500 crore, bolstered by equity participation of strategic investors Deutsche Boerse (DB) and Singapore Exchange (SGX) at Rs 5,200 per share. Strengthening its networth was also the exchange’s robust earnings for 2007-08.
The bonus would be offered to broker members and several other non-broker shareholders, which collectively own 51% stake in the BSE. Apart from DB and SGX, the list also includes Indian investors like SBI, LIC, Bajaj Auto and foreigners like Dubai Financial LLC, Atticus Mauritius and Caldwell Asset Management.
Though the bonus issue is in line with brokers’ expectations, the move is seen as the first step towards eventual listing of the exchange’s shares. BSE is required to enhance its capital base significantly from the current level for listing purpose.
Post-bonus, the exchange’s equity capital would increase from the current Rs 78 lakh to Rs 10 crore, which is the limit applicable to companies seeking listing on the National Stock Exchange (NSE). The minimum paid-up capital requirement for BSE listing is Rs 3 crore.
Confirming the bonus issue, a broker shareholder said: “The move is positive in the sense that we are a step closer towards listing. But, we are more concerned about broader issues relating to stock market turmoil and the consequent loss in business, which have badly affected our prospects.”
In the last AGM, shareholders had insisted on speedy listing of BSE’s shares, which has been delayed by several months. The exchange was planning to get its shares listed by the end of the last fiscal. By increasing capital through bonus issue, the corporatised and demutualised exchange would fulfil the listing criteria and would be able to take the process further.
Sources say BSE is looking to list shares with or without initial public offering (IPO). Some brokers feel the cash-rich exchange does not need more funds and so could seek Sebi exemption from floating an IPO. As on March 31 2008, its reserves stood over Rs 1,500 crore, bolstered by equity participation of strategic investors Deutsche Boerse (DB) and Singapore Exchange (SGX) at Rs 5,200 per share. Strengthening its networth was also the exchange’s robust earnings for 2007-08.
The bonus would be offered to broker members and several other non-broker shareholders, which collectively own 51% stake in the BSE. Apart from DB and SGX, the list also includes Indian investors like SBI, LIC, Bajaj Auto and foreigners like Dubai Financial LLC, Atticus Mauritius and Caldwell Asset Management.
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