The new Export Import Policy is likely to micro manage sectors that have been laggards and a drag on the overall growth targets.
KOLKATA: Exports may have notched a growth above 20% in course of Export Import Policy 2002-07, but the new policy is likely to micro manage sectors that have been laggards and a drag on the overall growth targets.
While sectors like engineering, drugs and pharmaceuticals, chemicals and allied products have set a scorching pace in overseas markets, the new policy will have to focus on textiles, leather products and agriculture allied products that have fallen short of overall export growth and worse have shown de-growth in certain key global markets.
Despite dismantling of quote regime in 2005, Indian textile has failed to tap opportunities and tackling similar poor performance of other traditional export sectors will be the key initiatives of the new policy that will target a /R 1.5% Indian share of the total global merchandise trade by 2009.
Number crunching of sector specific export data of the last five years by DNA Money reveal sharp divergent trends that have somehow been buried in the euphoria of 20%-plus export growth in the last five years.
The engineering sector has notched a growth of 26% in 2006 over previous calendar, chemicals and allied products 26% and drugs and pharmaceuticals 22%, textile export growth has been a meagre 9%, leather and leather manufactures 8.6% and agro and allied products 9%. Between 2002-03 and 2005-06, export growth rates have been 22.06%, 14.98%, 27.94% and 21.06%.
The worst hit among traditional Indian exporting sectors has been textile, which has shown no growth or de-growth in some countries like New Zealand, Australia and the Americas.
Overall the textile exports, excluding readymade garments, grew 9% in 2006 to $7,621 million from $6,977 million. The readymade garment segment recorded a growth of 28% in 2006 at $8,393 million, up from $ 6,536 million. But these aggregate figures hide the real story that lies in dis-aggregated numbers.
The textile sector was seen to hold huge potential in terms of output and employment potential when quota system was dismantled in 2005. Export of textiles including ready made garments grew 20.4% to reach $14.8 billion in 2005-06, but in the second year of quota free regime, growth was a moderate 11.7%, while that of China grew by 28.9%.
Furthermore, during April-October 2006, textile and clothing exports to US grew 6.2%, while that of China grew 16.8%. Even though India improved its global share in textile and clothing trade from 2.9% in 2004 to 3.4% in 2005, China recorded a far higher gain of 24%.
A similar trade scenario shows up from leather product export figure. While total exports was up just 8.6% at $2,616 million in 2006, it registered a negative growth of 6.64% in North America.
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