India's exports may show a further decline for the sixth straight month in March due to demand contraction in the markets such as the United States, the European Union, Japan and the West Asia, a survey by the industry chamber Federation of Indian Chambers of Commerce and Industry (Ficci) revealed. The survey was conducted in the last two weeks of March and about 125 entities were surveyed for the purpose.
While engineering goods, gems and jewellery, chemicals, marine products, tyres and to some extent leather are among the sectors that anticipate negative or zero growth, processed food and agro-items, sports goods and apparel exporters expect a modest growth of 1-5% in 2009-10. Pharmaceutical exports from the country, which are immune to changes in income levels, are expected to grow by more than 13% because of lesser presence of Chinese pharmaceutical companies in the international market.
More than 61% of the participants in the survey felt that merchandise exports would either contract or remain flat in 2009-10. The outlook for the fiscal year was based on current position of exporters' order books and experience in the second half of the last fiscal year. On rupee depreciation relative to the US dollar, more than half of the participants in the survey saw a moderate positive impact on exports and one third of them indicated negligible impact of the depreciating rupee.
On Saturday, the Commerce Secretary G K Pillai hinted that the country's merchandise exports might have achieved the scale-down target of $168-170 billion for the just-ended fiscal year 2008-09. I expect that in March exports would be about $12-14 billion, he told reporters on the sidelines of a meeting organized by the Indo American Chamber of Commerce (IACC).
The estimate is lower than the $16.3 billion exports recorded in March 2008. For the 11 months up to February, merchandise exports aggregated to $156.59 billion, rising 7.3% compared to 23.7% in the corresponding period last year. In February, exports fell nearly 22%.
The government had earlier pegged the merchandise exports target at $200 billion for 2008-09, but later scaled it down to $170 billion in the wake of recession in the developed markets that led to slump in the demand for merchandise. Last fiscal year, exports from the country grew 18% in rupee terms mainly on account of about 20% depreciation in the value of the rupee against the US dollar.
After showing an impressive growth of over 30% in the first six months of 2008-09, India's exports started contracting in October, when shipments dipped 12.1% for the first time in five years due to the recession in the developed markets. While the US and European Union together constitute more than one-third of India's total exports, markets such as West Asia, the Asean region and Japan, account for about 15%, 2.4% and 10% of the country's overall exports. The official export data for March is scheduled to be released on May 1.
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