FIEO Expects Trade Deficit at $150bn this Fiscal, Engineering Exports in Plummet in October

[Ref: FIEO Press Release dated 1 December 2011]

Reacting to sharp dip in export growth in October, 2011, Mr Ramu S Deora, President, FIEO said that looking at global developments, he has already forecasted that exports will suffer in third & fourth quarter of the current fiscal. President, FIEO expressed his concern over drop in exports in value term for important products such as Engineering, which was averaging about US$7.73 billion in first six months but dropped to US$5 billion in October, 2011. Same is to of Petroleum where average went down from US$4.5 billion to about US$ 4.3 billion. The crisis in EURO Zone will spread in next couple of months making exports more difficult in ensuring months.

The decline in exports in October, 2011 with surge in imports is in contrast to the figure in the last month, said Mr Deora and this is the prime reason for growth in trade deficit which has reached US$93.7 billion and may cross US$ 150 billion for the current fiscal.

Mr Deora further said that rupee depreciation might have helped few segment of exporters to fetch better margin but not have helped to lift the export volumes. The weak rupee on the other hand is hurting the manufacturing with increase in prices of inputs and hike in freight cost. This is also blunting RBI strategy to contain inflation. Competitive manufacturing is the key to export growth and thus Mr Ramu S.Deora, President, FIEO suggested that RBI should intervene to arrest the high volatility in Rupee.

President FIEO said that his forecast that Exports will dip in the 3rd and 4thQuarter and may touch US$ 280 Billion by the end of this fiscal is becoming true. He urged the Government to reduce the cost of credit for industry in general and exports in particular so that competitive rates may push exports.