Financial Daily from THE HINDU group of publications
Saturday, Jun 01, 2002
Industry & Economy
Exports & Imports
Export trend shows diversification to small nations
NEW DELHI, May 31
A 15x15 product-market matrix of India's exports in the first three quarters of 2001-02 (April to December) reveals "mixed" trends with the share of 15 major commodities in India's total exports remaining stable, while the share of 15 major countries declining against the comparable months of the previous fiscal.
Official computation of the trends in the 15 product-market matrix shows that the share of 15 major commodities in India's total exports remained stable at around 65 per cent with gems and jewellery topping the list, followed by readymade garments cotton including accessories and cotton yarn, fabrics, made-ups. But interestingly, all these items of exports logged a decline in rupee terms and even sharper decline in dollar terms compared to the corresponding three quarters of 2000-01.
Exports of electronic goods displayed a remarkable growth of more than 25 per cent in rupee terms during April-December 2001, compared with the same period the previous year. Other product groups, which registered export growth exceeding 10 per cent in rupee terms, include petroleum products, plastic and linoleum products, machinery and instruments, drugs, pharmaceuticals and fine chemicals.
A worrisome feature is that primary and semi-finished iron and steel products registered the maximum decline (-21 per cent), followed by readymade garments manmade fibres (-18 per cent) and marine products (-11 per cent).
On country diversification, the share of the 15 major countries of India's export destination declined from 66 to 63 per cent during April-December, reflecting a growing diversification of exports to smaller countries not included among the top 15 countries. The US, UAE and Hong Kong continued to occupy the first three slots among destination countries despite a sharp drop in exports to the US and Hong Kong in both rupee and dollar terms during the period under review.
Malaysia, Bangladesh and China recorded growth exceeding 20 per cent in rupee terms, thereby improving their rank among the top 15 countries of export destination.
Officials in the Commerce Ministry told Business Line here that with the Government's strategy to focus on trade with specific regions and countries as is sought to be scored in the Medium-Term Export Strategy the Ministry had initiated in January 2002, followed by the Exim Policy, there appears to be a subtle but notable diversification of exports by destination even prior to these announcements.
Besides, the recessionary trends in some of the advanced countries seem to have hit exports from India to its traditional trading partners (the US, EU countries and Japan).
On the other hand, countries of South and South-East Asia (Malaysia, China and Bangladesh) have logged a fairly salutary growth of exports from India in recent months. This is also corroborated in the growing share of exports to these countries in stark contrast to a decline in share of exports with the traditional trading partners.
The commodity trade, on the other hand, has not witnessed any major diversification in terms of the 15 commodity groups under review. But, exports of certain commodities, which perhaps have higher income elasticity, have been derailed by recession in the advanced nations. The tendency of some of these countries to adopt protectionist measures (steel, for instance, in the case of the US and the EU) have led to the decline in the share of these products in India's total exports. The sources said the commodity groups, which seem to have been hit the most, include primary and semi-finished iron and steel followed by readymade garments manmade fabrics and marine products.
On the other hand, the fastest growing export items include electronic goods and petroleum products.
There seems to have been a diversion of demand for electronic goods from the US to Malaysia and Singapore.
The decline in demand in US market for electronic goods appears to have been more than counterbalanced by the growth in demand for these products in the Malaysian and Singapore markets, resulting in an overall export growth exceeding 25 per cent in rupee terms.
Growth in demand for plastic and linoleum products seems to be led mainly by China, while a similar trend is detected in the case of export of drugs, pharmaceuticals and fine chemicals as they have made incursions into the Chinese markets.
A surprising factor is that the US too appears to have contributed to the demand post-September 11, 2001.
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