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Industry sees future growth being driven by export demand

 

India Inc. is optimistic on the prospects for the growth of the economy in the next 12 months, foresees faster sectoral growth and expects future growth to be driven by export demand. This prognosis is held out by the FICCI-PwC India Manufacturing Barometer 2019: Building Export Competitiveness.

 

The Manufacturing Barometer was released here today by Mr Puneet Dalmia, Chairman, FICCI Manufacturing Committee and MD, Dalmia Bharat Group, along with other dignitaries.

 

Mr Dalmia said, "As global trade has changed significantly in the last few years with new trade routes based on Global Value Chains (GVCs), we need to provide Indian exporters the opportunity to contribute to align with these global value chains. There are number of sectors where India can be a truly global leader. India can globally lead in exports in a number of sectors like textiles, automotive, chemicals, leather, metals and many more such areas."

 

Most of the respondents were upbeat and confident about India’s positive growth performance. Most also believed that India has the potential to grow at an average rate of 7 per cent or more in the next 12 months. This is aligned with the projections of international development agencies such as the World Bank Group and the IMF.

 

Fifty-eight per cent of the respondents believe that their sector would grow faster by at least 5 per cent in the coming 12 months.

 

The respondents contend that one of the key reasons for faster growth is the focus on Ease of Doing Business and introduction of reforms such as GST that are opening new vistas for investments across the country. In the past, the manufacturing sector relied on the domestic market as the primary source of revenue.

 

The survey reveals the growing importance of exports to manufacturing companies in the future, with a focus on a good mix of parts—component trade along with end product trade, and the imperative to strategise for both types. Further, India Inc. seems to have begun placing greater emphasis on technology integration, including a renewed focus on R&D and innovation. To cement India’s status as a global export destination, it expects the government to focus on business ecosystem reforms and the industry’s integration with global value chains.

Currently, over 65 per cent of the companies whose CxOs participated in the survey have the Indian market as their major source of business. However, 85 per cent of them believe that their future growth will be driven by export demand. This is in sync with India’s export performance over the last 12 months. In 2017-18, India’s exports grew by 9.8 per cent, the fastest growth in the last five years.

 

An interesting observation from the survey is quality advantage being seen as the reason for driving export growth, ahead of cost advantage as the primary reason. However, imports during the same period also grew by 19.6 per cent.

 

Non-availability of intermediate products and raw materials and cost and quality advantages in sourcing from other markets were seen as the key reasons for rising imports. But what is encouraging is that most of them believe that over the next 5 years, their dependence on imports will reduce.

 

The survey notes that to make export growth more sustainable, the industry requires an ecosystem that promotes manufacturing competitiveness and facilitates the production of goods of global quality standards at prices that are competitive. Stronger economic relations with certain countries in target sectors will enable the development of competitive supply chains beyond Indian borders, the survey noted, as per a release.

 

Source : Exim News Service - New Delhi, Jan. 10

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