FICCI Paints a Gloomy Future for Exports

By M H Ahssan

While the Centre is pinning hope on the stimulus package to boost exports, a survey carried out by apex business chamber FICCI paints a gloomy picture of the export prospects with a view to seeking a bigger bailout package.

According to the survey, “ In the face of aggressive pricing by China, lack of bank finance and the real threat of cancellation of orders, exporters will be hard put to meet the $ 180- billion export expectation.” The survey says: “ Exporters are hobbled by lack of bank finance. Many of the exporters who participated in the survey have said that despite easing of the monetary policy by the RBI, banks are still maintaining their conservative stance with regard to export finance.” “ Some of the problems that exporters are facing include bank’s refusal to increase credit limit, bank’s being too cautious in terms of fresh lending and continuation of high interest rates despite significant monetary easing. Chinese exporters are getting export finance at much lower rates and on more liberal terms,” the survey adds.

Indian exporters are facing ‘ meet the China price’ demand from across the market and the fear is that this would intensify in the months ahead. The survey shows that many Indian exporters have already cut their prices by an average 10% to 15% or even more in some cases just to retain their toehold in the market. The survey further shows more cuts in the months ahead cannot be ruled out.

According to it, exporters are facing cancellation of orders and this is telling on their order book positions. Nearly 56% of the companies that participated in the survey said that they have faced at least a few cases of cancellation of orders. There have also been several cases where the international buyers have defaulted on their payments or are refusing to accept delivery of consignments with nearly 30% of the companies complaining about such behaviour.

The present survey saw participation from 367 companies with a wide geographical and sectoral spread. The turnover of the companies that participated in the survey ranged from Rs one crore to Rs 5,000 crore and the companies represent sectors like automotive, consumer durables, food processing, eather, marine products, gems and jewellery, FMCG, textiles, handicrafts, metal and metal products, heavy engineering, IT, pharmaceuticals and chemicals.

The FICCI survey says respondents clearly want the government to do more to bail them out of the crisis. The exporters have asked for their ‘ working capital’ and ‘ cash flow’ through prompt disbursement of dues on drawback, CENVAT credit and DEPB claims.