With engineering exports struggling to catch up with the last financial year’s performance, the total outbound shipments may be dented. Total merchandise exports had risen by 10 per cent in the first nine months of the current financial year.
While engineering exports had totalled $92 billion in 2017-18, these raked in $64.92 billion in April-December, 2018-19. At this rate, these exports should worth $86.56 billion for FY19.
But, industry insiders apprehend that engineering exports may even face trouble cracking the $80-billion mark for FY19, way down from initial expectations of at least $90 billion.
“Apart from a severe liquidity crunch affecting small- and medium-sized firms, the rising cost of domestic steel and rubber has impacted the sector,” said Ravi Sehgal, chairman of the Engineering Exports Promotion Council said. Higher prices charged by domestic steel producers have hit the manufacturing capabilities of user industries. Indian steelmakers have had to lower prices of prime steel in world markets but the same didn’t happen in the domestic market, Sehgal added.
This is expected to drag down the overall export growth of the country as the engineering sector remains a major foreign exchange earner, chipping in 26.45 per cent of the total exports in the first nine months of FY19. In the April to December period, merchandise exports have grown by about 10 per cent year-on-year. Engineering good exporters recently asked Commerce Minister Suresh Prabhu to expedite priority sector status for the sector, so that lending by banks becomes smoother. On the other hand, in major export growth regions like Iran, the primary banking entity — UCO Bank — has provided no support, exporters complain.
Commerce department officials said the United States’ decision put an embargo on Iranian goods have disrupted banking channels and talks were on to expand the trade fund available with UCO Bank to help exporters.
Copper exports hit rock bottom
On the other hand, the court-mandated closure of a single copper smelting plant in Thoothukodi, Tamil Nadu, has brought down copper exports by more than $2.5-3 billion, according to sources.
The facility, owned by Sterlite Copper, a business unit of global mining and metals major Vedanta Group, had faced local opposition for long, owing to charges of irrevocably polluting the environment as well as causing a range of health problems.
The National Green Tribunal (NGT) had ordered the reopening of the Sterlite Copper plant, which was shut down after an order of the state government pollution control board on May 28, 2018. However, the Tamil Nadu government had appealed to the Supreme court against the NGT order.