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The April Export Figures May Not Bring Cheers for MSME

Date 19-May-2017
Subject The April Export Figures May Not Bring Cheers for MSME

New Delhi, May 18 (KNN):The Commerce Ministry has announced an spectacular  increase in Indian exports during April, 2017.

However, questions are being raised on whether there will be  any solace for the MSME exporters having a near 40% share in the total merchandise exports.

As per a recent announcement by the Commerce Minister, Nirmala Sitharaman, India’s export  for April has jumped by nearly 20% in dollar terms,  over  the exports during April, 2016., an achievement indeed.

This  is particularly heartening  when the export figures were showing decline / stagnancy over the last 24 months.

The doubts in the MSME sector are how much sustainable the growth is and whether this will trigger a fresh cycle of increased performance by the sector.

MSMEs  have a leading role in export of  readymade garment, leather and footwear and Gems and Jewellery which again are important contributors  in India’s export basket.

And figures  for exact increase in export of these MSME intensive items  during March and April, the two months of accelerated growth in exports are not readily available.

Also  the annual figures for the full year 2016-17 are also not made available in public domain..

Research team of FISME, the leading MSME federation have analysed the  data available in Trademap , the international  trade  data portal  and tell an agonising story.

Export from India  has gone down secularly from 2013 to 2016 calendar year and between 2014 and2016 the drop in export was more than 17%, in dollar terms.

Coming to the individual product groups, exports of  readymade garments have nearly stagnated between 2015 and 2016.

For leather and leather products, another sector dominated by MSMEs there is actually drop in exports during the last two calendar year according to trademap data.

The story is identical for labour intensive MSME sector of Gems and Jewellery which has  15% share in India’s export basket.

So where do we look for the indicators   for the imminent growth cycle  in the exports particularly  from the MSME sector??

Increase in  credit offtake is a natural corollary to the growth in any economic activities as enterprises particularly MSMEs  cannot maintain a cash chest ready for use  for increasing manufacturing as per market demand.

But the RBI data shows the credit offtake of the MSME sector  is going down and the ‘Medium’ sector, representing the more enabled enterprises are having a chronic drop in credit off take during the last 24 months.

Exporters are also entitled for ‘export Credits’ in various forms to gear up production for export demands.

If there is a surge in export orders, naturally, exporting MSMEs will go for this soft credit window to upscale … but the RBI data culled out by the FISME research team  shows a clear stagnancy in  export credit released by the banks during the last year.

So while all economic factors showing a deceleration in exports, the Government data shows otherwise.


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