Domestic factors impacted India's exports in last fiscal : PHD Chamber
While appreciating India’s export growth of around 10% at US $ 302.8 billion in 2017-18 increased from US $ 275.8 billion in 2016-17, Shri Anil Khaitan, President, PHD Chamber of Commerce and Industry said that the growth of exports was not in line with the PHD Chamber’s expectations of USD 325 billion on revival of global demand.
While releasing a study on ‘Impact of GST on Business, Industry and Exporters’, Shri Anil Khaitan said that various structural and domestic factors such as after-effects of demonetization and teething problems of GST have significantly impacted the potential of exports growth.
Many of the exporters are still struggling for their IGST refunds and are out of exports business as their working capital has been squeezed. Crores of rupees have been stuck in the IGST refunds process, said Shri Anil Khaitan. On the other hand, the trade deficit has been widened by 45% to USD 157 billion in 2017-18 compared with USD 108 billion in 2016-17 on the back of tremendous rise in imports vis-à-vis revival of domestic demand, said Shri Anil Khaitan.
The trade deficit at USD 157 billion is observed at highest in the last five years, said Shri Anil Khaitan.
The domestic import demand has increased significantly vis-à-vis larger increase in import volume by 20% during 2017-18, said Shri Anil Khaitan.
India’s imports grew by around 20% at US $ 459.6 billion in 2017-18 from 384.3 billion in 2016-17.
The labour intensive exports, where we hold significant competitiveness and opportunities for India, such as textiles, footwear, farm products, and gems and jewellery have been impacted significantly, said Shri Anil Khaitan.
We are not able to capitalize the emerging global market opportunities due to roadblocks in the IGST refunds, said Shri Anil Khaitan. The year 2017-18 can be translated as a missed opportunity for India to touch an unprecedented growth in its exports, as world economy has shown remarkable signs of growth and major economies like US, EU, Japan are showing rise in their import growth, said Shri Anil Khaitan.
It can be witnessed from the fact that India’s exports as a percentage of GDP has fallen to its lowest since 2003-04, viz. 12% during 2017-18, added Shri Anil Khaitan.
India should have achieved atleast 20% growth on rising imports from Advanced Economies, said Shri Anil Khaitan. The export growth from countries like South Korea, Indonesia and Malaysia registered robust export growth during 2017.
South Korea’s exports grew by 16%, Indonesia by 17% and Malaysia by 15% during 2017, said Shri Anil Khaitan. Despite being the fastest moving emerging economy in the world, we are struggling to contribute to the global value chains across the world, added Shri Anil Khaitan.
Apart from the IGST refund issues, inadequate transport infrastructure facilities has adversely affected timely shipments and have hindered the true growth potential of Indian exports, said Shri Anil Khaitan.
There is an environment of despair in the exporters’ community and they are in the stressed mode because of losing their competitiveness to China, South Korea, Indonesia, and other countries, said Shri Anil Khaitan. The lackluster export performance will have a crippling impact on the growth of Indian economy in the coming years, if domestic roadblocks are not contained at the earliest, said Shri Anil Khaitan.
It becomes imperative at this juncture that Government should focus on clearing the IGST refunds at the earliest, said Shri Anil Khaitan.
Going ahead, the Government needs to plug the loopholes to lackluster trend in growth of exports.