Exports face currency, commodity risks: Nirmala Sitharaman
NEW DELHI: Notwithstanding the continuous fall in exports, the government has said India’s competitiveness has not reduced and declining exports is a concern for some sectors because other sectors are holding out well despite the adverse conditions.
“Fall of exports is because of commodity prices, currency fluctuation, not because your competency is down…Currency volatility all over the world is a matter of worry, it is a cause for concern because your exports in terms of quantity in many sectors are remaining the same… but you are not earning out of it because of the volatility in the currency,” Commerce and Industry Minister Nirmala Sitharaman said after the first meeting of the Council of Trade Development and Promotion here.
Her statement comes a day after commerce secretary Rita Teaotia was reported to have said that India’s exports in this financial year may not exceed $270 billion, 13% less than last year’s figure of $310 billion, throwing light on the dismal export scenario on which the government had last month commented that “there is no crisis in India on the export front and while there is a need for caution, there is no need for alarm.”
STATES’ EXPORTS
Even though she said that exports are not performing poorly across the board, states wanted the Centre to deal with infrastructure for trade promotion by continuing with the Assistance to States for Development of Export Infrastructure and Allied Activities (ASIDE) scheme. “Some land-locked states might need transport subsidy or some incentives that have been withdrawn,” she said.
An official present in the meeting said that last mile connectivity is a challenge for states due to which their cost of logistics go up and they have been asked to give inputs for creating facility for testing, certification, trace-back, packaging and labelling.
YUAN DEVALUATION
Sitharaman voiced her concern on the biggest fall in the yuan in five months, which pressured regional currencies and sent global stock markets tumbling. “The depreciation of the Yuan is definitely going to make imported goods (from China) cheaper… the fact is my deficit with China will (also) grow,” she said.
In 2014-15, the bilateral trade between the countries stood at $72.3 billion with the trade gap at $49 billion. While the government would not rush into any action, it had discussed likely steps it could take to counter an expected flood of cheap steel imports with domestic producers and the finance ministry, she said.
Cheap steel imports from China, fuelled by over supply from that country have rendered India steel companies uncompetitive with many of them asking the government to set a minimum import price to stop cheap imports undercutting them. “We have done ground work but are not rushing into it,” Sitharaman said when asked if India would impose a minimum import price for steel.
Read full article: Economic Times
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