AFTER-EFFECTS OF

GLOBAL FINANCIAL
CRISIS ON INDIAN
EXPORTS

MADE BY :
RICHA RATHORE
MBA SEC-B(HR& IB)
IMPACT OF GLOBAL CRISIS ON
INDIAN ECONOMY BY 3
CHANNELS
üFinancial sector: Indian Banking
Sector was slightly over-exposed
due to Sub-prime crisis.


üExports : Exports of goods &

services accounts for 22% of
Indian GDP & their multiplier-
effect was quite large wrt import
content eg: Chinese exports.
üExchange rate : Indian rupee has
come under pressure with the
outflow of port-folio
CONTD….
By Indian entrepreneurs seeking to


replace external commercial

borrowings by domestic financing
 India’s Dependence on
Advanced Countries for
Exports
ü Heavy reliance of India on US and other
Developed countries for its exports
•
ü In 2007, around 17% of India’s exports
sought US markets, while 29% were
directed to G7 countries and around
58% of the exports were directed
towards advanced countries.
ü
ü The Gems and Jewellery sector, being
highly export oriented, is a significant
contributor to India’s foreign
exchange earnings.
CONTD….
ü The OECD economies accounts for over
40% of India’s export market.
ü 50% of India’s exports — textiles,
garments, gems and jewellery,
leather and so on — originate from
the labour-intensive small- and
medium-enterprises.
ü
ü The Indian IT industry has achieved
26.3% exports growth clocking
revenues of Rs. 46,100 crores ($ 9.5
billion).
ü IT Services, Products and Technology
services have grown by 18.3% to
 IMPACT ON INDIAN
EXPORTS
üThe first sector to be hit was the
gems and jewellery which felt the
impact in Nov & more than 300,000
workers have lost their jobs.
üNegative impact covered EOU
sectors garments, textiles, leather,
handicrafts & auto-components.
ü21% decline in Feb(2009) was the
steepest fall in exports for the last
2 decades.
üThus, export slumps brings down the
GDP growth rate of the country.
CONTD….
üthe global credit crunch has
affected the exporters, especially
the smaller players, as they have
to depend heavily on export
credit.


üIndian exports is witnessing a shortfall

of about 20% against their target of
US$ 200 billion for 2008-09 as
prevailing domestic economic
conditions have caused severe
dampening.
TOTAL EXPORTS SOURCES
 Slowdown in Advanced
Economies
GD P Grow th(% ): 2006-2008

4.3
5.0
4 .1
3 .0 3 .0
4.0 2.8
2 .2
3.0 2 .6 2 .6
2.0
2006
1 .5
2.0 1.1 2007
0.7
1.0 2008

0.0
W orld United E uro A rea A dvanc ed
S tates (15) E c onom ies
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 ila n d m a n u fa ctu rin g im p o rts
INDIA’ S EXPORT GROWTH
Figure: India's Export Growth: Quaterly
Comparisons
60.0

40.0

20.0

0.0

-20.0

-40.0
2005-06 2006-07 2007-08 2008-09
Apr-June
Apr-June 34.5 23.6 20.5 37.4
Jul-Sep
Jul-Sep 32.4 30.8 19.2 25.6
Oct-Dec
Oct-Dec 22.5 20.5 33.0 -13.5
Jan-Mar
Jan-Mar 10.8 16.4 41.9 -27.7

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 .
 RECOVERY OF INDIAN
EXPORTS FROM CRISIS
üWith the recovery in the domestic
economy since the second quarter
of FY10 and gradual uptake in the
external demand conditions, the
sector has witnessed some positive
developments.
üBoth exports(sep 09) & imports(Oct
09), have experienced an upturn in
growth.
üThe stimulus package provided by
the government to combat the
CONTD….
üThe government had also increased
the pre-shipment export credit
period (from 90 to 180 days) and
post-shipment export credit period
(from 180 to 270 days) to ease the
longer inventory cycles faced by
the sector.
üExport growth in rupee terms had
turned positive since July 2009
mainly due to the depreciation of
the rupee against the US dollar.
üThe various incentives announced by
the government for the sector to
 PROJECTED EXPORT
GROWTH RATE



Current Situation of exports
in India
1.Agriculture Industry :- Agriculture
Industry has grown at an impressive
rate of 2.7% during the 50 Years of
independence of country.


 2. Chemical Industry :- Chemical

Industry has key linkages with various
other down stream business such as
automotive , consumer durables ,
engineering , food etc.

CONTD….
 3. Indian Jewellery :- Indian Jewellery
consumes around 800 tones of gold ,
which account for 20% of the global
gold consumption and account for 8.3%
of
the global jewellery sales.


4. Home Furnishing :- India is world

famous for its wide range of quality
home
furnishing products, include fabrics ,
bed linen , table linen , toilet and
CONTD….
 5. Indian apparel & textile Industry :-
This sector is second largest employment
generator after agriculture and accounts
for 14% of the total Industrial
Production.

6. Indian Leather :- Indian Leather

industry is among the top 8 export
earners
for the country and employs around 2.5
million people.
EXPORTS: BACK FROM THE
GRAVE

E xp o rts h a ve n o tch e d 1 6 . 1 % g ro w th
Yo Y w h ich h a ve le d th e lo g istics
co m p a n ie s E P S g ro w th .
CONTD….
• Export form less than 20% of India
GDP and hence lends a low
degree of dependence on Global
recoveries wrt China has nearly
50% of 2.5 trillion GDP being
formed out of exports to US and
EU and hence at a greater risk to
global slowdown.
•
 Measures for Building Resilience

ü Simplification in customs procedures

for reducing transaction costs: This is
aimed to reduce transaction costs
associated with international trade.
•
ü Examine the likely impact of anti-
dumping and safeguard duties on
down-stream user industries prior to
imposition of the duties in the current
scenario.
ü expeditious multilateral examination of
CONTD….

Thus , the current global slowdown



may have a silver lining if the

opportunity offered to diversify
exportable products and markets and
enhancing competitiveness is fully
utilized by the domestic industry.
 Thank You......