Subdued Global demand may impact India's export growth

  • 20-Nov-2018
  • Subdued Global demand may impact India's export growth

As global crude prices soften and the world demand heads southwards, exports growth may soften in the second half of the current fiscal.

Experts said that even though a depreciated rupee and a strong order book could provide some tailwind to exports, unfolding external factors like oil prices and slowing GDP growth in some economies could pin down its growth.

Ajay Sahai, Director General and CEO, Federation of Indian Export Organisations (FIEO), said "maintenance" of exports growth will be a challenge from October onwards.

"Petroleum is the common factor in both imports and exports. On one hand, it boosts exports and on the other, it bloats the import bill too. Now, with the easing of crude prices, we expect the import bill to come down, but the bigger challenge from October onwards is that the base effect of crude price will kick in along with lower crude prices and so maintenance of export growth will be a challenge," he said.

Madan Sabnavis, Chief Economist, Care Ratings Ltd, also sees "moderate" export growth due to lower global crude prices. He expects the current fiscal year to end up with an export growth of 10-12%. Last fiscal, exports grew 9.8% to $303 billion.

FIEO's Sahai has a higher growth forecast than Sabnavis at 15%. He sees Indian exports benefiting from the US-China standoff and a weaker rupee. According to him, exporters' order books for the coming period are healthy and this has given the export group, he heads, the confidence to raise a robust growth outlook for the current fiscal.

"I must say that it is a problem so far as petroleum exports are concerned, but looking at the order books of exporters we expect 15% growth because in some sectors, particularly in textile and apparel, when I talk to exporters they say that with rupee moving to over 70 a dollar, many buyers have come back to them," said the FIEO DG.

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