Global & Domestic factors submerging exports: Ajay Sahai, Executive Director, FIEO

New Delhi, Feb 19 (KNN) With the global economy suffering, India has witnessed a radical fall in exports. As per the data released by Ministry of Commerce and Industry, exports fell 13.6 percent from January a year ago, while imports contracted 11.01 per cent.

In an Exclusive conversation with Ajay Sahai, Executive Director, FIEO, KNN digs out the reason behind this continuous trend in shortfall in Indian exports.

“The fall in exports has moreover been a global trend. The exports have been falling on a global level. The average growth in exports on a global level has been of 5.8 per cent, while the average growth in last three years has been recorded to be 2.5 per cent” Sahai told KNN. “Talking about the previous fiscal year, the exports have rather contracted” he added.

Sahai mentioned that price of the raw materials for the exported goods have been falling drastically. As deduced from the conversation, the price for petroleum has gone down from $115 to $ 30. Aluminium prices have also suffered, falling to match the level of its price in 2005. Steel and copper have also faced the same trend, with a drastic fall in its prices.

The Executive Director mentioned that due to the slowdown in China’s economy, the commodity market has undergone a severe change. This factor has also seemed to affect the Indian exports adversely.

India is not the only country to suffer from the downfall in exports. China has witnessed a severe downfall of 14 per cent in exports.

“The fall in Indian export, thus can be attributed to the slowdown in global trade, import appetite has been falling for the countries which are dependent on raw materials and petroleum” Sahai uttered.

“However, a bigger factor to affect exports is the manufacturing base of the country” he added. “The manufacturing sector in India is suffering tremendously. Though, we have observed an upliftment in the manufacturing base, but the IP data since last two months has been suggesting the irregular and uneven growth trend,” he further elaborated.

He also mentioned that the capital good sector has been showing a double digit negative growth since last two months, which is not at all a good sign for manufacturing.

“We can’t control the global factors but we should make an effort to look into our domestic issues, such as, high logistics cost, high transaction cost and infrastructure adequacies. We need to make our economic base strong to an extent that at the end of the global repercussions in trade, we can emerge as a competitive economy in terms of exports” he concluded. (KNN Bureau)