IS IT A YEAR OF revivAl?
After facing volatility in domestic and international markets because of the unprecedented depreciation of Indian rupee and sluggish demand from the international market in 2013; the cargo and logistics industry in India is expecting a revival in 2014, depending on the early sign of recovery. Cargotalk spoke to leading trade practitioners to present the ground reality.
indian exports, which contribute up to 70 per cent of the growth in GDP in July-Sept quarter after clocking four months of double-digit growth, posted a 5.9 per cent increase in November, 2013. A close analysis of the overall exports and product profile suggest that Indian exporters are on track to not only realise the export target, but also exceed it by US$ 10-15 billion. In the meanwhile, gems & jewellery sector bounced back showing over 20 per cent growth in October.
A Sakthivel, Chairman AEPC, has expressed satisfaction over the growth in export for the month of November 2013. “The garment exports have been registering a positive growth since last 8 months. The growth of RMG for the month of November 2013 is 21.29 per cent, registering to the tune of US$ 1,051 million; the cumulative growth of 16.15 per cent for April-November 2013,” he said.
According to him, apparel exporters’ constant efforts to work on technology upgradation, up-skilling, innovation in terms of product and design, along with stringent compliance practices has yielded this kind of growth. AEPC has organised 24 shows across the world in 2013, and responses from buyers were very encouraging. “We have to leverage our strengths of raw material, and design, to grab the space left open by China. We can do much better if government accepts our demand of a separate chapter for pre/ post packing credit rate of 7.5 per cent,” Sakthivel maintained.
However, said Rafeeque Ahmed, President of the Federation of Indian Export Organisations ( FIEO), “The general forecast is that 2014 will be a better year than this year. However, the global situation is still very fluid. There are a few green shoots here and there, but the situation will continue to be uncertain in 2014.” He pointed out that US has posted recovery with unemployment rate of less than 7 per cent and increase in consumer spending, but housing market and business spending have slowed. EU is still trying to come out of the woods and its GDP grew by 0.1 per cent in third quarter over previous quarter. “We are concerned with the instability in Middle-East, North Africa expropriation and legal dispute with many Governments of Latin America. The foreign exchange of Argentina has come down to US$ 30 billion and Venezuela has imposed many restrictions on current and capital accounts,” he observed.
In his opinion, the major challenge lies at home where manufacturing is not back on track. After four months of modest IIP growth, the country witnessed negative growth in October. “I would like to reiterate that exports cannot be sustained even on medium-term basis, unless manufacturing backs exports. There is need to push manufacturing by augmenting investment in the sector both for modernisation and expansion. The new manufacturing policy and new Investment & Manufacturing Zone should be given thrust to achieve this objective,” the FIEO President maintained.
He also pointed out that the transaction costs should be reduced through ongoing improvements. The Trade Facilitation Agenda would provide Indian exporters an opportunity to quickly address the transaction cost issue imparting competitiveness to our exports.
According to Vikram Mansukhani, National Operations Head, DIESL; the macro economic performance so far in FY1314 has by and large been one of gloom, tightening of purse-strings and looking at every expense through a microscope. “3PL service providers and logistics players at large have been in front of this battering ram and have had to find ingenious ways of dealing with spiraling input costs in terms of manpower, land, rentals and infrastructure,” he said. According to him, the majority of the larger 3PL operators have participated in bids this year, which to a large extent have just been dipsticks by SCM groups of various organizations, to check if their current rates are competitive. Cargo agents still seem to rule the roost with their local “jugaad” capabilities which are perceived as responsiveness by customers.