New Delhi, Jul 12 (KNN) Continuous economic turmoil in the European economies and no pick-up in North America may cast shadow over India’s annual target of achieving USD 63.45 billion engineering exports in  2013-14, necessitating urgent industry- government measures  in the wake of steep fall of 5.6 per cent in shipments in April-May period of the current fiscal.

For the April-May cumulative period of the current fiscal, engineering exports fell to USD 9.35 billion from USD 9.91 a year ago, according to the Engineering Export Promotion Council (EEPC). 

Urgent steps are imperative in the wake of over eight per cent drop in engineering exports in April and 2.55 per cent decline in May, 2013 against the annual target of achieving about 12 per cent growth in the current fiscal, EEPC Chairman Aman Chadha said   in a statement today. 

The setback is largely because of negative trend in the European and North American economies, the largest markets for the Indian engineering products.

He said it is in this context that the EEPC and senior officials of the Commerce Ministry will hold a brainstorming session with the diplomats of the African missions in India on July 16 to push engineering exports to Africa so that the loss in the western markets can at least partly be made up.

Engineering exports which had shown an impressive compound average growth rate of 31 per cent between 2003-08 suffered a jolt after the global financial crisis of 2008 as the maximum impact was felt in the European economies which are the largest market for the Indian engineering products. The setback was also seen in the North American markets which are the second largest destination for these products.

After a brief recovery from the setbacks of the 2008 global crisis, engineering exports again fell by 3.19 per cent to USD 56.76 billion in 2012-13 from USD 58.63 billion in the previous year. 

While some diversification efforts along with support from the government have been made to find new markets in Africa and Latin American countries, the base in the new destinations is so low that it will take many more years to scale up the shipments there, the EEPC said. 

The EU is India’s largest export market and engineering exports, which in 2004-05, accounted for nearly 24 per cent  of total engineering exports, saw its share dwindling and by 2012-13 fell to 19 per cent.

“Thus, a fall in 5 per cent in total engineering exports is a substantial loss in market. This is more so for engineering goods, which is a long gestation industry working on long term contracts and where it takes considerable time to develop markets and credibility. The same is the case in North America, primarily the USA, where our exports share is around 11-13 per cent,” the EEPC said.  Both these markets have shown negative growth even in April 2013.

EEPC India together with the India Brand Equity Fund (IBEF) has also begun an exercise to embark on a Brand India Promotional campaign for certain engineering sectors like electrical machinery, pumps, machine tools and medical devices.

This campaign will be promoted in various exhibitions of these sectors so that there is greater awareness about Indian engineering products globally. More such engineering segments will be chosen every year for developing a brand promotion campaign.

While engineering exports share to LAC went up from two per cent to five per cent of total engineering exports in the last couple of years, the share to Africa went up from 11 per cent to 16 per cent; the low base does not help much in the short run.

This is because such goods have long gestation periods and work on long term contracts. Critical issues like trust, meeting technical specifications, logistical requirements, etc, needs time to build hence even if non-traditional markets are incentivised, it will take some time to show results in a big way.  (KNN)