Labour-intensive export worst hit, says study.

An internal study conducted by the Director General of Foreign trade (DGFT) shows that labour-intensive export sectors have fared the worst in the last financial year. With commerce and industry minister Anand Sharma already indicating that the focus of the foreign trade policy (FTP) would be labour-intensive sectors, the DGFT study will form the basis for the sops likely to be offered by the government to exporters.

According to the study, export sectors such as handicrafts and carpets has declined during 2011-12 against 2010-11. While carpets export declined by 19 per cent in 2011-12 at $0.840 billion as against 1.03 billion during the year ago period, export in handicrafts (excluding hand-made carpets) declined 23.17 per cent at $0.196 billion in 2011-12 as against $0.257 billion in the previous fiscal.

Indian exports have witnessed a sharp slowdown with outbound merchandise inching up just 3.23 per cent to $24.5 billion in April. The exports have taken a hit due to moderating demand for Indian goods in developed markets like the US and Europe. According to the study, export of leather and leather products, engineering, textiles (readymade garments and cotton textiles) and tea increased in 2011-12. The study also attributed the moderation in a few labour-intensive to a shrinking demand in developed countries due to global economic slowdown.

Export of cashew, coffee and cotton yarn and fabrics increased by 47.81 per cent, 44.18 per cent and 17.43 per cent respectively. Engineering goods export grew by 16.91 per cent while export of fruits and vegetables by 33.38 per cent. Export of jute manufacturing, including floor coverings, declined by 0.06 per cent

Leather and leather products saw an increase of 22.51 per cent during the last financial year. The annual supplement to FTP to be unveiled on June 5 is likely to focus on these sectors and provide relief to exporters of the commodities. The exporters have been seeking two per cent interest subvention on loans and have been making a case for reduction in cost of credits. The government is likely to take corrective action for increasing exports. Declining exports and increasing imports have added to domestic economy woes in form of high current account deficit.

To provide fillip to the export sectors, need-based incentives have been given by the government. Measures like export incentives under Vishesh Krishi and Gram Udyog Yojana, Focus Market Scheme, Focus Product Scheme, market-linked FPS for market expansion and product diversification, interest subvention for specified sectors, and import of capital goods under Export Promotion Capital Goods among other measures have been provided to exporters earlier.

Foreign trade hits roadblocks

* Exports have witnessed a sharp slowdown with outbound merchandise inching up just 3.23% to $24.5 billion in April

* Carpets export declined by 19% in 2011-12, handicrafts declined 23.17% in 2011-12 as against $0.257 billion in the previous fiscal

* The study by Director General of Foreign trade will form the basis for sops likely to be offered by the government to exporters

Source : indianexpress.com