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Export growth buoyant: CII survey

Our Bureau

NEW DELHI, May 20

DESPITE a slowdown in industry, the country's export growth continues to be buoyant, the latest Business Outlook survey of the Confederation of Indian Industry (CII) shows.

In a statement, CII has said that close to 100 of the 170 respondents surveyed are engaged in exports and a majority of them are optimistic about an increase in both volume as well as value terms in the coming months.

The survey relating to the actual performance of industry during October-March 2000-01 and the forecast for April-September 2001 covers responses from member-companies across a spectrum of industry, both in the public and private sector.

Forty-eight per cent of the respondents witnessed an increase in export volumes in the past six months. Fifty-six per cent expect an increase in volumes in the next six months. Those who experienced a decline in volumes in the past six months were 24 per cent while only 12 per cent expect a decline in the next six months, the survey shows.

The trend is similar as regards value of exports, with 58 per cent of the exporters expecting an increase, compared to 46 per cent who actually experienced a decline in value in the past six months.

The survey shows that in the past six months, 27 per cent realised lower values for their exports. However, here again, only 12 per cent foresee a decline in the value of exports in the next six months.

The exporting community expects competition to intensify in the short-term in the global markets and have indicated that this could be one of the important factors limiting exports.

The other constraint indicated by the respondents includes prices (61 per cent), procedural bottlenecks (42 per cent), cost of credit (36 per cent), and delay in clearance by customs (30 per cent).

There is a concern with regard to slowdown in the US economy affecting growth prospects in the short run, but the respondents do not seem to be unduly concerned by the removal of quantitative restrictions (QRs) in the recently announced Exim Policy.

Under these circumstances, an interesting trend discernible across the sectors is that domestic industry is strategising to win in a downturn. While, on the one hand, most of the respondents foresee grim prospects for their sectors, interestingly, many o f the respondents also individually expect to ride out the lean months ahead.

About 37 per cent of the respondents foresee better individual performances, while 36 per cent were of the opinion that the present trends of slowdown will continue and 27 per cent predicted more difficult times ahead.

Furthermore, 37 per cent of the corporates are generally preparing themselves to increase their competitiveness by reducing costs and improving efficiency.

The survey shows that for a majority (45 per cent), the general business situation for the next six months is a cause for pessimism in their respective sectors of industry. For 23 per cent, their sector faces better prospects in the next six months.

The survey also shows that the general global slowdown would also result in an increased competition and consequently immense pressure on margins in the short-term. However, in the long run, there is an underlying optimism based on recent policy announce ments.

Use-based sectoral classification of responses to the survey shows that producers of intermediate goods and service providers are the only ones relatively optimistic about their short-term prospects. However, the basic and capital goods producers predict a worsening of the general business situation in the next six months.

The production growth expectations show a mixed trend with 35 per cent forecasting a growth in production of above 10 per cent, 33 per cent of between 5-10 per cent and 20 per cent between 0-5 per cent.

The single most important limiting factor to growth is that there has been a slowdown in demand, cutting across the sectoral value chain.

The survey shows that the major limiting factors to output during the last six months and expected to continue in the short-term include lack of orders (51 per cent), Government (24 per cent), private sector (37 per cent) and overseas customers (31 per c ent).