Export of iron and steel products witnessed a sharp rise of more than 100 per cent in June, even as export of engineering goods from India registered a decline of 7.24 per cent, said an analysis report by engineering export promotion council of India, on Friday.
“Out of 33 engineering export items, 27 recorded negative year-on-year growth in June, while all the six positive entries related to metals, with iron and steel being on top of the table,” the report said.
The downturn in domestic demand, the instability of the supply chain and the severe scarcity of construction labor have driven a number of top steel producers to export more than 50-60 per cent of their sales volume during the May-June period.
Iron and steel grew exports by more than 100 per cent in June 2020 with shipments of $1.32 billion compared to $653.52 million in the same month last year. Non-ferrous metals saw a rise of more than 30 per cent during the same period.
EEPC India analysis also showed a sharp decline in exports of industrial machinery, auto components, air-condition and refrigerators, machine tools and host of other items. The drop in exports value went up to 83 per cent in some cases, like railway transport, it added.
Overall engineering exports in June dropped by 7.24 per cent after a severe drop of 64 per cent in April amidst near-global lockdown and 24 per cent decline in May 2020. However, during June, exports of iron and steel to China rose by over 1400 per cent to $524 million from $35 million in the same month last year, to Vietnam it went up by over 700 per cent to USD 183 million and to Taiwan, the increase was 200 per cent to $35 million.
Mahesh Desai EEPC India Chairman said, ''India’s export of low value-added intermediate products rose while high value-added exports continued to dwindle…the government needs to identify those sectors and promote investment, technology up-gradation and R&D in the same."
Desai, founder of the Hyderabad-based Meera Group of engineering firm was appointed as the new chairman of the EEPC India in June.
Piyush Goyal, Commerce and Industry Minister, talking at an event organized by EEPC India said that the total merchandise exports for June 2020 would return to almost 88 per cent of shipments of the corresponding month of the previous fiscal.
"With the unlocking of the economy, the exports should come back on track and the trend would be reflected in the June numbers," Goyal said.
Desai highlighted to the minister some of the restrictive measures being faced by Indian exporters in different countries and sought government intervention.
"Turkey has imposed inappropriate duties on engineering goods like pumps," Desai said.
Desai also discussed other issues like the formal launch of the Nirvik scheme, need for export credit being available at Repo plus two percentage points.
Nirmala Sitharaman Finance Minister during February announced Nirvik (Niryat Rin Vikas Yojana) scheme to provide enhanced insurance cover and reduce the premium for small exporters.
Desai said that as most of India’s engineering sector comprises MSMEs which do not have access to capital or technology, the government should extend them further help.