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US set to re-emerge as biggest market for Indian merchandise |
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Petroleum products, cheap drugs, garments fuel demand
Three years after being edged out by the United Arab Emirates (UAE), the United States is all set to stage a comeback as India’s biggest export destination riding on a big jump in imports of petroleum products from India’s surplus refining capacities, transportation equipment and low cost medicines, among others. The smart recovery defies general perception in official and trade circles that a serious demand crunch in western markets, including the US, is hitting India’s dollar earnings hard.
Complete details of India’s merchandise exports to the US will be available once trade data are for 2011-12 are fully compiled. The US had traditionally been India’s biggest trading partner, primarily on the back of huge Indian exports. It lost that place to the UAE in 2008-09, after the global financial meltdown following which, India’s exports to the US dropped sharply.
Provisional numbers relating to foreign trade analysis by the directorate general of commercial intelligence and statistics (DGCI&S), reveal that exports to the US in value terms have inched very close to the UAE in the first ten months of 2011-12, with shipments from India to the US going up 40 per cent at $28.1 billion in April-January, against barely 14.5 per cent in case of the UAE at $28.5 billion in the same period.
The rise in exports to the US has been across all sectors, with the maximum jump in shipment of petroleum products, chemicals and pharmaceuticals, as well as cotton yarn, fabrics and made-ups, that was not listed among the 10 most exported items to US in 2010-11.
Outgoing commerce secretary Rahul Khullar refused to comment on the possible re-emergence of the US as India’s biggest export destination, suggesting that trends captured by data in the first 10 months were inadequate to make an assumption. The commerce ministry has held that the deceleration in India’s exports since October 2011 has been largely due to contraction in demand from the US and the EU. This week, Khullar conceded that “there are serious demand constraints in the west and the latest US numbers are not as encouraging.”
Yet, numbers for April-March 2011-12, compiled from the United States Census Bureau data reflect that imports from India to the US peaked at their all-time high of $37.68 billion in 2011-12 against $30.9 billion in previous 12 months, registering a growth of 21.9 per cent. This was much higher than the aggregate increase of 15.4 per cent in all American imports during the period.
Till 2007-08, the US was consistently India’s largest trading partner for the combined value of both imports and exports. India’s bilateral trade with the US stood at $41.7 billion that year, against $37.9 billion with China and with $29 billion with the UAE. In 2008-09, the UAE became India’s biggest trading partner followed by China and the US with bilateral trade at $48.1 billion, $41.7 billion and $39.6 billion, respectively.
India’s single biggest exports to the UAE have always been gems and jewellery. However, jewellery exports were severely compromised in March, following the shutting down of the gems and jewellery trade for 20 days following the announcement of 2 per cent additional import duty on gold and levy of 1 per cent excise duty in the March 16 budget. On its part, India imports huge quantities of crude oil from the UAE, besides third country manufactured goods, usually from China, rerouted from the country’s export processing zones. India’s total exports grew 21 per cent in 2011-12 at $303 billion, but there was significant slowdown in April 2011, with shipments that month barely growing 3.2 per cent at $24.5 billion, against $23.9 billion in April 2010. Available data indicate that export of petroleum products went up 117.4 per cent in the first 10 months to $1.22 billion against $500 million in the corresponding period of last year. Export of transportation equipment went up 55 per cent at $1.8 billion ($1.1 billion in April-January 2011-12), while gems and jewellery exports grew 44 per cent at $5.9 billion ($4.1 billion). Exports of machinery and instrument grew 30.6 per cent at $1.6 billion ($1.2 billion), and exports of drugs, pharmaceuticals and fine chemicals grew 29.9 per cent at $2.5 billion ($1.9 billion). Cotton yarn and fabrics, which emerged as the ninth largest exported product from India to the US, witnessed 18 per cent increase at a little over $1 billion. The Federation of Indian Exporters Organisations (Fieo) has been demanding sops from the government in the upcoming annual supplement to the foreign trade policy (FTP).
“I am astonished by the huge growth in exports to the US and these numbers could be an eye-opener for everybody in the exporting fraternity,” a senior Fieo official said without wanting to be named. Atul Dhawan, chairman of the economic affairs committee of the American Chamber of Commerce in India, attributed the jump to the recent shift in government’s policy from traditional low-cost products to high-value engineering goods.
“Earlier India’s exports to the US were traditional items. However, the product basket is changing and now the thrust is more on high-value non-traditional items like engineering goods, pharmaceuticals and value-added textiles,” Dhawan said.
Source : mydigitalfc.com
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