Indian smes in the export sector witnessed a dull phase in the last financial year as trade volumes dropped drastically due to global economic deceleration
Indian SMEs in the export sector witnessed a dull phase in the last financial year as trade volumes dropped drastically due to global economic deceleration. In addition to the recessionary pressures, the stringent export duties and the currency rate fluctuations in the global markets affected the export segment immensely last year. Continuing the downward trend, this year does not look very promising either for the domestic export sector.
Dwindling export volumes
India’s overall exports fell by 33.3% in March 2009, recording a decline for the sixth consecutive month since October 2008. The export value for the month plummeted to $11.51 billion from $17.25 billion recorded in March 2008.
“The export earnings for most small and mid-sized companies in the January-March quarter have been poor. The cancellation of orders by international buyers in major global markets has made it difficult for the small units to sustain their margins,” said the OP Agarwal, Chairman of AMBO Experts, a mid-sized tea exporting firm in Kolkata,
The labour intensive sectors such as textiles, auto components, leather, gems and jewellery, chemicals and handicrafts have been hit the hardest during the January-March quarter. SMEs in the oilmeal, iron ore, tea and manufacturing sectors also witnessed a tough time during this period due to a sharp fall in economic activity.
“The pace at which export volumes have declined during the last financial year has been concerning for the SME segment. In order to arrest this downward trend, the government and export associations need to take immediate action. Assistance in the form of higher tax rebate and increased credit availability is likely to help SME exporters overcome the crisis,” said proprietor Nitin Maheswari of a small-sized Kolhapur-based textile exporting firm, Ambika Synthetic Mills.
Bleak prospects
As the key export destinations for Indian SMEs — the US, UK and Europe — continue to reel heavily under the financial meltdown, the prospects for the export sector seem unlikely to improve in the near term.
During these uncertain times, the SME export segment needs to explore new markets and focus on innovating. In wake of the ongoing slump, strategic business initiatives would enhance competitiveness and help small businesses make a strong comeback when the market rebounds.
For more detail on SME News log on to http://www.bizxchange.in
