Exports growth pegged at 13% in Jan

NEW DELHI: Exports are likely to grow for the third consecutive month in January 2010, as per estimates of the commerce department, making the case for a possible withdrawal of the stimulus package for sectors that were doing well.

The finance and commerce ministers are scheduled to meet later in the week to take a decision on the continuation of the stimulus package for exporters, commerce secretary Rahul Khullar has said.

Exporters, however, feel that it is too early to pull the plug, especially for sectors that were yet to come out of the red.

“In January, I expect exports to be about $ 14 billion,” commerce secretary Rahul Khullar told reporters at an event organised by Assocham on Tuesday. This is about 13% higher than $12.38 billion of exports in January 2009. The figures will be out early next month.

The commerce secretary said exporters should be ready for some cut-back of the stimulus given to them by the government over the past year to make their products more competitive in the shrinking global market.

The government had extended support to exporters in the form of loans at discounted interest rates and incentives, including duty-free scrips, which can be used either to import goods duty-free or sold in the market for cash for exporting identified products to particular markets. Intense debate is on within the government for withdrawal of stimulus with both FM Pranab Mukherjee and Planning Commission deputy chairman Montek Singh Ahluwalia indicating that time may be ripe for planning an exit as the domestic as well as global economies were showing signs of improvement.

Exporters, on the other hand, argue that there is still a lot of instability globally and the government should not be in a hurry to withdraw stimulus.

“The world has certainly not stabilised as news of countries like Spain, Greece and Portugal defaulting on their commitments are still pouring in,” says Tilak Raj Manaktala, a Delhi-based exporter and member of the Delhi Exporters Association.

Commerce and industry minister Anand Sharma, on Monday, said there could be a partial withdrawal of the stimulus package for sectors that were doing well.

The commerce department announced additional sops for about 2,000 new products from labour intensive sectors such as engineering, handicrafts, textiles, chemicals, electronics and some metals which had not responded well to the packages announced earlier.
Exports had slipped into the negative growth zone in October 2008, mainly due to low demand in the EU and US markets, and had failed to grow for thirteen straight months. With the stimulus packages given by the Western governments beginning to show results in the form of increased demand, exports turned positive in November 2009.

Overall exports for the entire fiscal, however, is expected to be much lower than last fiscal’s exports of $189 billion. In the April- December 2009 period, exports were at $ 117.5 billion, about 20% lower than exports worth $147.56 billion in the same period of the previous fiscal.