Indian export prices uncompetitive by 10%-12%

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Coming to chemicals that constitute over 8% of India's total exports, FICCI survey noted that export realizations have fallen by 3% in March, 8% in April and 12% in May 2007. And in some cases realizations have fallen by 15% also. On an average price of Indian exports of chemicals was 7 to 8% higher vis-à-vis the competitors only because of rupee appreciation. Export turnover could be down by 11 to 16% in April-May 2007, FICCI noted. Hardening of interest rates has increased the cost of production by 1.5 to 5% in this sector and profitability is reduced to 4.3 to 10%, FICCI said.

Electronics was another sector where the impact of rupee appreciation and hardening of interest rates is significant. Cost of working capital has increased by minimum 2% and cost of production has increased by 3 to 4% thereby reducing the profit margins from 4.8% to 8.8%, noted FICCI. Around 25% fall in the level of exports of some electronic good exporters has been reported. Here also, prices of our export products are rendered uncompetitive by 10 to 12% in world market, FICCI survey pointed-out.

In case of processed foods, there could be a sharp fall in the level of exports according to FICCI survey. Around 10 to 17% fall in the export turnover is reported for April-May 2007 in the survey and it is expected that exports of processed food could fall by over 20% in the next 3 to 4 months. Average export realizations have fallen by over 6% per unit of the product and Indian exporters are losing-out to exports from the South American countries (Brazil etc), Pakistan and China etc.

Likewise, level of exports could fall by 50% for some exporters in case of Machinery and Handicraft items. Export price of Indian machinery is uncompetitive by 15% due to rupee appreciation and rising interest rates have increased the cost of production by 5%, FICCI observed.

In such a scenario, FICCI said that the growth of manufacturing sector that has witnessed a record growth of 12.3% in 2006-07 could slow down significantly in the current year thereby affecting the overall growth of the economy.

Sourced From: FICCI