India needs to retain its export market share: President
As the volume of world trade is expected to remain sluggish in 2016, India needs to devise cohesive strategies of retaining its market share first and then increasing it, President Pranab Mukherjee said.
He also said that exports sector is dynamic and is affected by changes in the policy both at domestic and international level.
“We therefore need to be innovative in our approach to capture markets with customised products in today’s highly competitive world,” he said here at a function of the Federation of Indian Export Organisations (FIEO).
Mukherjee said that aggressive marketing would need to be backed by impeccable quality control standards to create a sustainable demand for Indian products abroad.
“We must be concerned with the volume of trade taking place as falling trade levels impact on the economy, industrial growth and employment levels.
“The volume of world trade is expected to remain sluggish even in 2016, growing at 2.8 per cent. In a scenario such as this, we need to devise cohesive strategies of retaining our market share first and then increasing it,” he added.
The President said that India need to focus on other important drivers of growth as well such as infrastructure, human capital, simplification of rules and procedures and improved access to finance.
It is necessary to have a focused approach in terms of procedures and banking solutions more suited to SMEs, he said.
Declining for 16th straight month in March, exports contracted by 5.47 per cent to USD 22.71 billion in the month as shipments of petroleum and engineering products shrunk sharply due to tepid global demand.
For 2015-16 , exports declined by 15.8 per cent to five-year low of USD 261.13 billion.
Mukherjee said the government has initiated measures under the foreign trade policy to boost exports.
Speaking about foreign direct investment, he said FDI is an important indicator of faith that overseas communities and investors repose in a country.
FDI in India has increased by 27.5 per cent to USD 42 billion in April-February period.
“This trend specially in a climate of contracting worldwide investments is welcome,” he said, adding the government is committed to providing an investment-friendly regime.
The government has relaxed FDI norms in as many as 15 sectors and “I am hopeful that it shall help attract higher FDI in our economy,” he said.
The President said that the world economy since 2008-09 financial crisis did never recover completely and the prospect of 2016 is also not very bright.
“India’s GDP growth is 7.6 per cent and as it is projected to be 7.7 per cent and 7.9 per cent in the coming years, we need not feel disadvantage because India is enjoying today the highest growth rate in the major economies of the world. Therefore this growth momentum is definitely strong positive signals,” he said.
Certain other macro-economic parameters clearly demonstrate the strength of India’s economy such as food inflation is largely contained by substantial supply management.
The President said that the government is firmly committed to healthy fiscal management. Fiscal deficit for 2015-16 was maintained at the budgeted level of 3.9 per cent and by targeting 3.5 per cent in 2016-17, “we are on course to achieve fiscal consolidation”.
“I am confident that we will fully realise the growth potential of our economy. But what is more important is that the high growth should spread its benefit to all citizens,” Mukherjee said.
“It is imperative that our domestic business promotes sustainable, stable and inclusive growth which encompasses all sections of society. The external sector is critical to the growth of any country, particularly in the context of globalising economy,” he said.
The global demand slowdown has affected India’s exports and it is “matter of some concern” that exports have been continuously decreasing since December 2014.
However, he said India’s services sector was comparatively better perhaps because of a recovery in India’s traditional market such as the US.
“While the export sector remained bleak, there was some comfort brought about by the falling commodity prices globally. With a dwindling import bill, it resulted in a healthy CAD of 1.4 per cent of GDP in the first three quarters of 2015-16,” he said.
He also said that Asia has contributed more than any other region in the recovery of world trade after the financial crisis of 2008-09.
The exchange rate is an important factor in export competitiveness. However, in spite of rupee depreciation in 2015, there was no surge in Indian exports because other currencies also depreciated against dollar, he said.