The FICCI Export Survey for the third quarter (October-December 2006) of the current fiscal shows that there has been some improvement in the near term outlook for exports amongst the participating companies.
The current survey reveals that while the outlook has improved, the Indian exporting community has been perturbed by two factors, namely increasing raw material prices and interest rates and the appreciation of the Rupee in nominal terms. This double whammy has emerged as an area where exporters are demanding immediate attention of the government.
The results of the previous survey (Q2) had shown that India’s exports are likely to move into a phase of consolidation with little probability of surprises on the upside. This sentiment captured in the FICCI survey found a reflection in the export performance of the country during the months of December 2006 and January 2007.
Round three of the FICCI Survey conducted during February 2007 reveals a positive outlook in merchandise exports for the next six months. However, further moderation in exports is likely to be seen in the next six months.
The Survey saw participation from 263 companies with a wide geographical and sectoral spread. The turnover of the companies that participated in the survey ranged from Rs 1 crore to Rs 10,000 crore and the companies represent sectors like automobiles, consumer durables, food processing, FMCG, textiles, handicrafts, metal and metal products, heavy engineering, pharmaceuticals and chemicals.
About 78% of the participating exporters felt that their export volumes would increase in the coming six months. While 32% of the participating companies were of the view that their exports will increase by up to 10% over the next six months, another 46% of the respondents indicated export volumes to go up by over 10%. Exporters believed that the bourgeoning volumes would be on account of higher demand in the existing international markets along with entry into the new markets.
Despite the highly competitive and cost-conscious global market, 44% of the exporters reported increase in the export prices in the next six months; this counter move towards the increase in export prices is in response to the expected intolerable low realizations on account of higher inputs costs.
SAARC, the UK, Middle East, UAE, European Union and Latin America are the key regions/countries that will see a strong increase in their imports from India in the next six months.
Apart from soaring prices of raw material, strong Indian Rupee against the US dollar and higher cost of credit, the others constraints causing delays and losses to the exporter community are inadequate infrastructure, poor power and port facilities and cumbersome customs and excise procedures.
The exporters have demanded that the government should lower the duty on the imports of raw material meant for the exports. They have also requested to take a re-look at the benefits accrued to the industries from the schemes launched earlier relative to schemes launched/replaced in 2006-07.
