India’s exports are likely to witness a momentary “setback or slowdown” following the demonetisation and ensuing cash crunch, a top official has said.
“It is a fact that perhaps the demonetisation process, as was pointed out, it may cause a momentary setback or momentary slowdown (to India’s exports),” Commerce Secretary Rita Teaotia said.
On whether the government has assessed the extent of impact on shipments, Teaotia said that Commerce Ministry has entered into a consultative process with all the export promotion councils to understand the level of adaptation to the effects of demonetisation.
“I think that we need...to take this as an opportunity for renewing the direction, for capitalising on the benefits that we can get from a far more transparent, far more open and let me say far less messy cash-based transactions,” Teaotia said.
“In the long run, we will all see the gain of this (demonetisation) as well as combining with the movement of GST that we should be seeing substantive strengthening of our status,” she said.
Addressing an awards ceremony organised by engineering exporters’ body EEPC India here on Tuesday, she expressed concern over the increasing agglomeration of the engineering exports at the lower ends of the value chain and the “somewhat unsettling” decline in the value addition.
She urged the engineering exporters to introspect on the issue and to focus on research and development to move up the value chain.
Teaotia said the Commerce Ministry is focusing on facilitating technology upgradation for boosting exports by bridging the gap between the leading R & D laboratories in the country and the industry and identifying specific products through which value addition can take place.
“We have identified as part of this process several important industrial clusters,” she said.
After recording negative growth for about two-years, exports have started recording positive growth. The outbound shipments continued to grow for the second month in a row, expanding by 9.59 per cent to USD 23.51 billion in October on healthy growth in shipments of jewellery and engineering products.
“The engineering sector is actually leading the reversal of the decline of exports over the last two years and has allowed us in October to register a growth of 9.6 per cent overall in the exports from India.
“It has been close to 36 months of decline and I think in that context a growth of 9.6 per cent is a great change and we hope that this will continue to be the direction that we are able to follow,” Teaotia said.
India’s exports are expected to reach USD 280 billion by the end of this fiscal as against USD 261.13 billion in 2015-16.
Teaotia also launched a mobile app put together by EEPC India which contains information about various initiatives, policies, events and market index prices.