AFTER-EFFECTS OF GLOBAL FINANCIAL CRISIS ON INDIAN EXPORTS

8/7/2019 AFTER-EFFECTS OF GLOBAL FINANCIAL CRISIS ON INDIAN EXPORTS

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AFTER-EFFECTS OF

GLOBAL FINANCIALCRISIS ON INDIAN

EXPORTS

MADE BY :RICHA RATHORE

MBA SEC-B(HR& IB)


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INDIAN ECONOMY BY 3

CHANNELSFinancial sector: Indian Banking

Sector was slightly over-exposeddue to Sub-prime crisis.

Exports : Exports of goods &services accounts for 22% ofIndian GDP & their multiplier-

effect was quite large wrt importcontent eg: Chinese exports.

Exchange rate : Indian rupee has

come under pressure with theoutflow of port-folio


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CONTD.By Indian entrepreneurs seeking to

replace external commercialborrowings by domestic financing


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n a s epen ence onAdvanced Countries for

ExportsHeavy reliance of India on US and other

Developed countries for its exports

In 2007, around 17% of Indias exportssought US markets, while 29% were

directed to G7 countries and around58% of the exports were directedtowards advanced countries.

The Gems and Jewellery sector, being

highly export oriented, is a significantcontributor to Indias foreign

exchange earnings.


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CONTD.

The OECD economies accounts for over40% of Indias export market.

50% of Indias exports textiles,garments, gems and jewellery,leather and so on originate from

the labour-intensive small- andmedium-enterprises.

The Indian IT industry has achieved26.3% exports growth clockingrevenues of Rs. 46,100 crores ($ 9.5billion).

IT Services, Products and Technology

services have grown by 18.3% to


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EXPORTS

The first sector to be hit was the

gems and jewellery which felt theimpact in Nov & more than 300,000workers have lost their jobs.

Negative impact covered EOUsectors garments, textiles, leather,handicrafts & auto-components.

21% decline in Feb(2009) was thesteepest fall in exports for the last2 decades.

Thus, export slumps brings down theGDP rowth rate of the countr .


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CONTD.the global credit crunch has

affected the exporters, especiallythe smaller players, as they haveto depend heavily on export

credit.

Indian exports is witnessing a shortfall

of about 20% against their target ofUS$ 200 billion for 2008-09 asprevailing domestic economicconditions have caused severe

dampening.


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TOTAL EXPORTS SOURCES


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Economies

4.3

4.1

2.2

2.8

2.0

1.1

3.0

2.6

0.7

3.0

2.6

1.5

0.0

1.0

2.0

3.0

4.0

5.0

W o rld United

States

Euro Area

(15)

Advanced

Economies

GDP Growth(% ): 2006-2

2006

20072008


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Tra d e d e ficit is fo re ca ste d to

in cre a se d u e to in cre a se in d e m a n d

fo r o il a n d m a n u fa ctu rin g im p o rts


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INDIA S EXPORT GROWTH

Figure: India's Export Growth: Quaterly

Comparisons

-40.0

-20.0

0.0

20.0

40.0

60.0

Apr-June

Jul-Sep

Oct-Dec

Jan-Mar

Apr-June 34.5 23.6 20.5 37.4

Jul-Sep 32.4 30.8 19.2 25.6

Oct-Dec 22.5 20.5 33.0 -13.5

Jan-Mar 10.8 16.4 41.9 -27.7

2005-06 2006-07 2007-08 2008-09

, ,Although India is expected to grow India has not.been able to remain insulated The impact was

- -strongly felt in Oct Dec 2008 09 and became stronger- .in Jan March 2009

RE VERY F INDIAN


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RE VERY F INDIANEXPORTS FROM CRISIS

With the recovery in the domesticeconomy since the second quarterof FY10 and gradual uptake in theexternal demand conditions, the

sector has witnessed some positivedevelopments.

Both exports(sep 09) & imports(Oct

09), have experienced an upturn ingrowth.

The stimulus package provided by

the government to combat the


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CONTD.

The government had also increasedthe pre-shipment export creditperiod (from 90 to 180 days) andpost-shipment export credit period

(from 180 to 270 days) to ease thelonger inventory cycles faced bythe sector.

Export growth in rupee terms had

turned positive since July 2009mainly due to the depreciation ofthe rupee against the US dollar.

The various incentives announced bythe overnment for the sector to


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GROWTH RATE

t t t t


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urrent tuat on o exportsin India

1.Agriculture Industry :- AgricultureIndustry has grown at an impressiverate of 2.7% during the 50 Years ofindependence of country.

2. Chemical Industry :- ChemicalIndustry has key linkages with variousother down stream business such asautomotive , consumer durables ,engineering , food etc.


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CONTD.

3. Indian Jewellery :- Indian Jewelleryconsumes around 800 tones of gold ,which account for 20% of the globalgold consumption and account for 8.3%

ofthe global jewellery sales.

4. Home Furnishing :- India is worldfamous for its wide range of qualityhomefurnishing products, include fabrics ,

bed linen , table linen , toilet andkitchen linen.


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CONTD.

5. Indian apparel & textile Industry :-This sector is second largest employmentgenerator after agriculture and accountsfor 14% of the total Industrial

Production.6. Indian Leather :- Indian Leatherindustry is among the top 8 export

earnersfor the country and employs around 2.5million people.


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GRAVE

. %E x p o rts h a v e n o tch e d 1 6 1 g ro w th

Yo Y w h ich h a v e le d th e lo g istics

.com p a n ie s E P S g ro w th


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CONTD.

Export form less than 20% of India

GDP and hence lends a lowdegree of dependence on Globalrecoveries wrt China has nearly

50% of 2.5 trillion GDP beingformed out of exports to US andEU and hence at a greater risk toglobal slowdown.


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Measures for Building Resilience

Simplification in customs proceduresfor reducing transaction costs: This isaimed to reduce transaction costsassociated with international trade.

Examine the likely impact of anti-dumping and safeguard duties on

down-stream user industries prior toimposition of the duties in the currentscenario.

expeditious multilateral examination of

CONTD


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CONTD.

Thus , the current global slowdownmay have a silver lining if theopportunity offered to diversify

exportable products and markets andenhancing competitiveness is fullyutilized by the domestic industry.


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Thank You......Thank You......

AFTER-EFFECTS OF GLOBAL FINANCIAL CRISIS ON INDIAN EXPORTS

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