Though Christmas is expected to bring some cheer for exporters, the growth in India's exports will not be as high it was last year. Not only are India's export markets in the doldrums, competitors are also picking up pace.
After 18 per cent export growth in 2002-03, the export growth has dipped to 9 per cent in April-August 2003.
Initial figures had put export growth in the double-digit range in May and June, which dropped to 5.75 per cent in July and further to 4 per cent in August 2003.
"While exports to the US have dropped rather sharply in the last two to three months, the European market is doing fine," Virendra Uppal, Chairman, Apparel Export Promotion Council, said.
October onwards, however, sales were expected to pick up on account of the Christmas season, he said.
The pick up is however only a seasonal factor and the overall level cannot rise significantly since all major markets for Indian exports are in recession.
The US economy has not stabilised, Europe is not doing too well and neither is Japan. Without a buoyant market exporters can only grow at the expense of other countries' marketshares.
However, our competitors continue to grow. China has the advantage of lower costs of funds, power, fuel and labour. In terms of infrastructure and logistics also, they are better off.
Countries in Southeast Asia, like Thailand, Malaysia and Vietnam were also coming up, R Veeramani, chairman, Export Promotion Council for Export-oriented Units, said.
On the whole, export growth this year will not be spectacular. While the government had set a target of 12 per cent growth for exports, the economy was likely to achieve only about half of that, economists said.
However, even 6 per cent is not a bad deal. It is faster than many other country's export growth figures and coming on top of an 18 per cent export growth in 2002-03, it is a fairly healthy figure, says Saumitra Chaudhuri, Economic Advisor, ICRA.
The appreciation of the rupee against the dollar is a factor, however, another reason that exports are not growing fast is that there is a growing domestic market looking more attractive than exports, he says.
The point is supported by Veeramani, who says new entrants are unwilling to enter the export business.
"They find it more advantageous to import and banks are giving dollar loans for that," he said.
With the industrial sector growth at 5.6 per cent in the April-July 2003 period and manufacturing growing at 6 per cent, the domestic market is providing more opportunities than the export market, at least for now.
