|Subject||As Exports Fall Short Of Mark, Govt Sets $500B Target For Fy17|
The government will come out with a new three-year export strategy soon to reset India’s merchandise export target beyond $500 billion a year by 2016-17. It is to be noted that the target for the three years ending in March will be missed by a wide margin.
“We are resetting our exports target for the next three years. It is expected to be ready by the middle of January. Yes, we did not achieve the target set prior to the global slowdown for three years ending March 2014. Now with the global economy recovering, we are likely to have a three-year target which will be more than $500 billion a year,” a top commerce ministry official told Financial Chronicle.
The new target will be for the three years beginning next April to March 2017.
When the economy was growing by over 9 per cent during 2004-08, India clocked over 22-27 per cent annual growth in exports. But subsequently it fell and for the most part of 2010-11 exports actually declined.
Later, with a fiscal and monetary stimulus, the economy picked up; so did exports which clocked $246 billion in 2011-12 when the target was $200 billion. Buoyed by this, the government set an ambitious target to double annual exports to $500 billion by 2013-14. This required annual exports growth of 26.7 per cent.
But actual exports are expected to be $325 billion in 2013-14, which the commerce ministry is confident of achieving.
India should be happy to clock 12-15 per cent export growth this year, a trade analyst said. In certain months clocking even double-digit growth appeared difficult, he added.
India’s export growth this year will be nowhere near the 22 per cent annual growth projected in the five-year foreign trade policy, which also expected $446 billion annual exports, analysts say.
There are lessons to be learnt from China, which kept its currency stable for decades, making manufacturing competitive and helping exports grow rapidly. “In India, our currency keeps on depreciating, hiding the deficiencies in our manufacturing,” Atul Joshi, MD and CEO of India Ratings & Research, said.
Unless India’s manufacturing became competitive, it was not possible for our exports to grow at the brisk pace of 25-30 per cent on a sustained basis like China, he said. India had a high economic growth potential, but it would take at least two years for the country to get back to 8 per cent GDP growth, he added.
Government economists say that from a longer-term perspective, accelerating growth in merchandise exports will build up the manufacturing strength of the economy. Production of goods meeting international standards requires awareness of how frontiers of technology and innovation are widening. There were also need to diversify India’s export basket and destination, they say.
The double-digit (11.7 per cent) growth in merchandise exports during July-October can be attributed to a tentative revival of global demand and a low base effect. In aggregate merchandise exports in the first 10 months of 2013 were 5.2 per cent and 2.6 per cent higher than in the corresponding periods of 2012 and 2011, respectively, India Ratings said in a report.
In the absence of any further global shocks and continuation of the easy money policy in the US and the euro zone, the revival in India’s export growth is likely to be sustained with a marginal positive bias, the report says.
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