It’s not official yet. But indications are exports in October will contract by 15 per cent, prompting the government to admit that the country may miss the $200-billion target set for this fiscal.
The decline will be the first in five years, and, according to director general of foreign trade R.S. Gujral, if petroleum products are excluded, the decline is steeper at 20 per cent.
Barring petroleum and a few other categories, exports fell across most segments, including engineering.
Labour-intensive industries — textiles, gems and jewellery, and handicraft — suffered huge reverses in October.
According to officials, more details will be available only in December, when the government comes out with official statistics for October. Between April and October this year, export growth dipped to 21.5 per cent from 30.9 per cent between April and September.
Gujral said India would miss the export target for this fiscal, given the slowdown in the global economy. He, however, hoped exports would surpass last year’s figure of $162 billion.
In a study released yesterday, industry chamber Assocham had said the country would miss the export target by 20 per cent. Besides the slowdown, the chamber felt high ocean freight rates and the government’s curb on certain items would hurt exports.
According to government data, trade deficit in April-September this fiscal was $59.7 billion. Research firm Dun and Bradstreet said deficit for the current fiscal was expected to be around $121 billion. “Financial measures such as a reduction in the cash reserve ratio, statutory liquidity ratio and the repo rate by the Reserve Bank of India, perhaps, have not yet benefited the small and medium exporters,” Gujral said.
With the impact of the global slowdown expected to last one more year, the government is working on measures to boost exports from labour-intensive industries as it wants to prevent large-scale layoffs.
“There are already buyers out there in the US markets who are facing credit squeeze, and the impact is all pervasive, from gems and jewellery to engineering goods. The only exception is petroleum, which is going to show about 10 per cent growth,” he said.
A high-powered committee set up by Prime Minister Manmohan Singh is reviewing the situation to come out with a policy response.
Officials said the government was planning to spend up to Rs 25,000 crore on infrastructure and rural employment guarantee programme to boost growth and create jobs for people who may be thrown out of work.
Ganesh Kumar Gupta, president of the Federation of Indian Export Organisations, said the government should intervene immediately to ensure liquidity.
Though the depreciation of the rupee has helped, exporters need more support such as reduction in the rate of interest for exports and a greater allocation to small and medium enterprises under the market development assistance programme.