Exports growth in some sector stagnant in MSMEs

Posted by Daily Shipping Times on 22-05-2017        Tweet

NEW DELHI: The Commerce Ministry has announced an spectacular increase in Indian exports during April, 2017. However, questions are being raised on whether there will be any solace for the MSME exporters having a near 40% share in the total merchandise exports.

As per a recent announcement by the Commerce Minister, Nirmala Sitharaman, India’s export for April has jumped by nearly 20% in dollar terms, over the exports during April, 2016. an achievement indeed.

This is particularly heartening when the export figures were showing decline / stagnancy over the last 24 months.

The doubts in the MSME sector are how much sustainable the growth is and whether this will trigger a fresh cycle of increased performance by the sector.

MSMEs have a leading role in export of readymade garment, leather and footwear and Gems and Jewellery which again are important contributors in India’s export basket.

And figures for exact increase in export of these MSME intensive items during March and April, the two months of accelerated growth in exports are not readily available.

Also the annual figures for the full year 2016-17 are also not made available in public domain..

Research team of FISME, the leading MSME federation have analysed the data available in Trademap, the international trade data portal and tell different story.

Export from India has gone down secularly from 2013 to 2016 calendar year and between 2014 and 2016 the drop in export was more than 17%, in dollar terms.

Coming to the individual product groups, exports of readymade garments have nearly stagnated between 2015 and 2016.

For leather and leather products, another sector dominated by MSMEs there is actually drop in exports during the last two calendar year according to trademap data.

The story is identical for labour intensive MSME sector of Gems and Jewellery which has 15% share in India’s export basket.

So where do we look for the indicators for the imminent growth cycle in the exports particularly from the MSME sector?

Increase in credit offtake is a natural corollary to the growth in any economic activities as enterprises particularly MSMEs cannot maintain a cash chest ready for use for increasing manufacturing as per market demand.

But the RBI data shows the credit offtake of the MSME sector is going down and the ‘Medium’ sector, representing the more enabled enterprises are having a chronic drop in credit off take during the last 24 months.

Exporters are also entitled for ‘export credits’ in various forms to gear up production for export demands.

If there is a surge in export orders, naturally, exporting MSMEs will go for this soft credit window to upscale, but the RBI data analysed out by the FISME research team shows a clear stagnancy in  export credit released by the banks during the last year.