New Markets Help Recovery of Indian Exports.

NEW DELHI: The thrust towards non-traditional markets such as Latin America and Africa appears to have helped India’s exports bounce back smartly from the severe contraction due to the demand slump triggered by the financial crisis.
India’s exports had contracted 4.7% in 2009-10 , but have risen sharply in the current fiscal, driven by robust growth in the newer markets.

Exports to Latin America doubled in the April-July 2008 period to $3.2 billion followed closely by Africa, the shipments to which were up more than 50%, detailed data put out by the government showed.

In contrast, exports to Europe, one of the biggest markets for India’s goods, were up only about 15% in this period, leaving them still below the levels in 2008.

In April-July 2010 India exported goods worth $12.9 billion to Europe, well short of the $16.3 billion worth of goods sent there in April-July 2008.

This indicates that the demand in the European markets has still not recovered to the pre-crisis levels, but India has managed to gain ground elsewhere.

After the global financial meltdown caused India’s exports to shrink sharply to traditional markets in the EU and the US, the government decided to promote the less tapped markets of Africa and Latin America in its trade policy announced in August 2009.

It gave incentives to exporters to explore 39 new markets — 26 under the focus market scheme and 13 under market-linked focus product schemes.

“The new and untapped markets are helping in maintaining the export momentum despite moderate growth in traditional markets. The market diversification strategy has started yielding result and will help us to expand our export base,” according to Fieo president A Sakthivel.

The strategy seems to have obviously worked, as the figures show. The absolute exports to these newer markets have increased to levels higher than those reached in 2008.

“It takes time for incentives to show full results. We expect exports in new markets to grow further,” a government official said.

This bodes well for India as it battles with the rising current account deficit, driven by the large trade deficit, the difference between exports and imports. In first seven months of the current fiscal, this difference was $ 72.8 billion.

Overall exports have grown 26.8% to $121.4 billion in the April-October 2010 period compared to exports in the same period last year.

The high growth is expected to moderate in the coming months because of the waning of the base effect (exports during this time last year had started growing), the government expects the target of $200 billion to be reached comfortably.

Source : economictimes.indiatimes.com