CII survey predicts buoyancy in exports

By Our Special Correspondent

NEW DELHI, MAY 19. In spite of industrial slowdown, export growth is expected to be buoyant over the next six months, according to the latest Business Outlook Survey of the Confederation of Indian Industry (CII). Over 50 per cent of those surveyed expect an increase in volume as well as value of exports in the coming months.

The survey relating to the actual performance during October to March 2000-01 and the forecast for April-September 2001 covers responses from member companies across a spectrum of public and private sector industry groups. About 48 per cent of the respondents witnessed an increase in export volumes over the past six months while 56 per cent expect an increase in the next six months.

The survey also finds the exporting community expects competition to intensify in the short term in global markets and indicates this could be one of the important factors limiting exports. Other possible constraints mentioned by industry include prices, procedural bottlenecks, cost of credit and delay in clearances by customs.

There is concern among corporates about the slowdown in the U.S. economy affecting growth prospects in the short run but the companies do not seem to be unduly concerned by the removal of quantitative restrictions in the recently announced Exim Policy.

Analysing the survey, the CII feels an interesting trend discernible across sectors is that Indian industry is strategising to win in a downturn. While on the one hand most respondents saw grim prospects for their sectors, many of them also individually expected to ride out the lean months ahead. About 37 per cent expected better individual performances while 36 per cent felt the present slowdown trends will continue and 27 per cent predicted even more difficult times ahead. The survey found that 37 per cent of the companies were generally preparing themselves to increase competitiveness by reducing costs and improving efficiency.

The survey reveals that for a majority the general business situation for the next six months is a cause for pessimism in their respective sectors. While the general index of industrial production brought by the Central Statistical Organisation already establishes a slowdown, the survey reveals that this would result in increased competition and consequently immense pressure on margins in the short term. Therefore the CII maintains the corproates are gearing themselves to streamline their processes and improve their productivity.

In the long run, however, there is an underlying optimism based on recent policy announcements. The industry expects that the implementation of a reform oriented budget and clear signals of a lower interest rate regime would bring back growth.

A detailed scrutiny of the survey shows that producers of intermediate goods and service providers are the only ones relatively optimistic about their short-term prospects. As expected, the basic and capital goods producers predict a worsening of the general business scenario over the next six months. Interestingly, a majority of the consumer products manufacturers also foresee a decline in the general business scenario in spite of a strong production growth, implying expectations of a decline in consumer spending.

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Section  : Business
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