The Commerce Department is hopeful that the worst is over for India's exports, as it points to export categories beyond India's two-largest forex earning sectors - petroleum and gems & jewellery - continuing to see growth on a monthly basis.
In January, the latest month for which the Commerce and Industry Ministry has released trade data, non-oil, non gems & jewellery exports rose sharply by 13 per cent, after growing 5.5 per cent in December. The data has been cited by the Department in its communications with the Prime Minister's Office on discussions about the health of the sector, senior sources said.
Processed petroleum and diamond, gold and jewellery make up roughly a quarter of all merchandise exports. However, due to uncertainties in global supply, sudden changes in domestic demand and fluctuations in international prices, the trade in both these sectors remain highly volatile. Policymakers and trade experts therefore attribute more importance to other sectors while measuring the inherent strength of domestic production and manufacturing.
According to exporters, traditional and labour-intensive sectors have already passed the most challenging phase of the pandemic-induced global slowdown in trade. In January, major manufactured export sectors such engineering goods, drugs and pharmaceuticals, electronic goods, organic and inorganic chemicals, showed impressive growth. However, apparel and leather exports stand out as key exceptions to the trend, continuing to contract.
Raw materials, which continue to account for the majority of India's total export basket also saw an uptick in shipment. This included plastic, coal, iron and other ores, minerals, cotton yarns, tea, and fruits & vegetables.
The apex exporters body, Federation of Indian Export Organisations (FIEO), has urged the government to soon notify the tax refund rates for the Remission of Duties and Taxes on Exported Products (RoDTEP) scheme. Live from January 1, 2021, the scheme aims to refund to exporters the embedded duties and taxes such as VAT on fuel used in transportation, Mandi tax, Duty on electricity used during manufacturing, that were so far not being refunded. While the government has clarified that the rebate would be claimed as a percentage of the Freight on Board value of exports, it is yet to bring out the specific refund rates.
"This will remove uncertainty from the minds of the trade and industry thereby forging new contracts with the foreigner buyers," FIEO President Sharad Kumar Saraf, said. Saraf also reiterated that the government must address some of the key issues including release of the required funds for RoDTEP, adequate availability of containers, softening of freight charges, resolving the issue of classification of certain exporters as risky.