Amid falling world trade and economic slowdown in Europe, India's ambitious target of hitting USD 500 billion in exports by 2014-15 fiscal year "looks next to impossible," India's apex industry body, Associate Chamber of Commerce and Industry of India (ASSOCHAM), has predicted.
"Achieving the ambitious target of USD 500 billion by FY 2014-15 'looks next to impossible' under the given global scenario. Even the World Trade Organisation has projected a sluggish world trade growth of only 3.3 per cent in the year 2013 as the economic slowdown in Europe continues to suppress demand for imports in the economically troubled continent.
The world trade had fallen to just about two per cent in 2012 from 5.2 per cent in 2011," ASSOCHAM said in a statement.
The trade body said there was a pick up seen in February this year, but India's merchandise exports declined by four per cent for the cumulative April-February period of 2012-13 at USD 266 billion while imports were USD 448 billion, leaving a huge gap of USD 182 billion.
ASSOCHAM said, "It should become a national endeavor to ensure that exports grow by leaps and bounds. That is possible only when selling in the exports markets become much more attractive. In the present global trade scenario, the only way the exports business becomes more attractive than the domestic market would be through tax exemption." It said while it would be drain on the exchequer, the overall results would be gainful to the Indian economy as higher exports would spur the economic activity by increased consumption and demand.
"As higher exports would reduce the trade deficit, the pressure on the current account deficit, the highest ever, would abate with several positives including currency stability," said ASSOCHAM, adding, "The depreciation in the rate of rupee has not really helped the exporters since the cost of imported raw material for export products has also gone up." The ASSOCHAM, quoting concerns of the RBI (Reserve Bank of India), said deterioration in export performance was broad-based in H1 (first half) of 2012-13 as compared with H2 of 2011-12 as concerns regarding global slowdown had escalated during the decline in exports was largely due to loss of momentum in petroleum products and engineering goods.
"Exports particularly to Germany, Italy, UK and Belgium have been affected. As a spin off exports to most emerging and developing markets have also decelerated," the Apex chamber said.
According to ASSOCHAM, situation on the export front, as highlighted by the Reserve Bank of India, calls for extra-ordinary steps as the present level of current account deficit (CAD) of 6.7 per cent of the Gross Domestic Product is not sustainable. Even if CAD finally works out to five per cent of the GDP for the entire financial year of 2012-13, it cannot be sustained, especially when exports remain subdued and fund inflows into the stock market have become uncertain.