New Delhi: India’s engineering exports are likely to touch $76 billion in the current fiscal, an increase of about 27% year-on-year, mainly due to increasing demand from new markets in Latin America.
“We are getting good demands from new markets like Brazil, Mexico, Argentina and Columbia. Exporters are also getting good orders from West Asia and Africa too,” Engineering Exports Promotion Council (EEPC) chairman Aman Chadha said.
The engineering sector contributes about one-fourth of the country’s overall merchandise exports and the share is expected to grow further, Chadha said.
During April-June this fiscal, the sector’s shipments grew by 94% year-on-year to $23 billion. In 2010-11, engineering exports registered their highest ever growth of about 85% to $60.1 billion.
However, Chadha said outbound shipments during the second half of the current fiscal may get hit due to the end of the Duty Entitlement Pass Book (DEPB), a tax benefit scheme, by September-end.
The lion’s share of about 60% of the funds under the DEPB goes to exporters in the chemical and engineering sectors.
Under the 14-year-old DEPB scheme, the government spends about Rs 8,500 crore annually to reimburse exporters on the taxes paid on the import equivalent content of export products.
Exporters are lobbying hard with the commerce ministry for further extension of the scheme.
“After September, engineering exports may not show excellent growth rates due to the end of DEPB,” he said, adding, “If the government fixes a high rate in the Duty Drawback scheme, then the high growth could continue.”
The government plans to replace the DEPB with an alternate Duty Drawback scheme. The DEPB, which was to end on 30 June, was extended till September so that there could be smooth transition to the Duty Drawback scheme.
The commerce ministry is looking at increasing the country’s engineering exports to $125 billion by 2013-14.
Engineering exports include transport equipment, capital goods, other machinery/equipment and light engineering products like castings, forgings and fasteners.
India’s exports stood at $245.9 billion in 2010-11.