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The Commerce Ministry last week came out with export figures for the month of July. The data shows that our overseas shipments rose for the 11th consecutive month, recording a growth of 3.9 percent over a year ago. That all sounds good, at least until we look at the export figures for the last few months. Exports growth stood at 27.6 percent in March, 19.8 percent in April, 8.3 percent in May and 4.3 percent in June. So, there has clearly been a loss in momentum, which needs to be addressed as a top priority. Otherwise, the hopes of a boost to the economy through exports revival, as reflected in the recent Economic Survey, may not take much time to fizz away.
More disturbing is the slowing pace of our non-oil exports. Shipments of non-oil goods have fallen in every month of the current financial year–2.67 percent in April, 1.10 percent in May, 2.67 percent in June and 6.47 percent in July. Additionally, while 19 out of 30 major product groups registered growth in July, decline in some categories, such as gems & jewellery, pharmaceuticals, engineering goods, carpets and RMG including textiles is not a positive sign. While the second volume of the Economic Survey stresses on the fact that India should have a respectable share of 5 percent of global exports, the current scenario does not look encouraging at all.
So, what are the factors responsible for this decline? The Rupee has appreciated for some time now while currencies of some of our major competing countries have depreciated during this period. Similarly, implementation of GST must contributed to this slowdown to some extent. But a recent report points out that domestic bottlenecks explain nearly 50 percent of this export weakness. It adds that nearly 60 percent of Indian exporters are mainly from the labour-intensive SME sector, which is at present facing some major challenges, including poor infrastructure, high wage costs and rigid labour laws, lack of ease of doing business and high interest rates, etc.
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