New Delhi: India is likely to miss the export target of $200 billion (more than Rs8.5 trillion) for the current fiscal year owing to a slowdown in the US and European markets, restriction on shipments of many commodities and higher fuel prices, a survey by industry body Federation of Indian Chambers of Commerce and Industry, or Ficci, said.
“The sharp increase in the price of oil has led to a surge in ocean freight rates which is affecting the competitiveness of Indian exporters,” the survey said, adding, foreign buyers are prefering to source from closer production points to save on the freight costs. If this trend continues, then domestic exporters would have to reorient their market strategies, it cautioned.
The buyers in the US are considering increasingly sourcing from Canadian, Mexican and other Latin American markets due to export curbs in India, it said.
Containers at Jawaharlal Nehru Port. Higher fuel cost has led to raised freight rates, hurting India’s competitiveness (Photo by: Ashesh Shah / Mint)
The Indian government has banned exports of pulses, edible oil and non-basmati rice, and also hiked the export duty on long steel products to 15%. Rising transportation cost for raw materials and finished goods is putting additional pressure on the exporters, it added.
Due to the slackening of the real estate and construction business in the US and European Union, demand for products such as granite and marble has gone down, it said and added that textile and IT sector have also cautioned about the future decline in demand form the West.
In 2007-08, India’s exports were worth at $155.5 billion, compared with the target of $160 billion.
Exports in April 2008-09 were valued at $14.4 billion, growing by 31.5% over the year-ago period.