THE RECENT11% appreciation (approx.) in the rupee value vis-à-vis the US dollar, has failed to hold back the exports from the Indian micro, small & medium enterprises (MSMEs), that contribute approximately 34% of the national exports. According to a CII survey, for MSMEs, majority i.e. 71% respondents expect a negative impact on their bottomlines, while 29% of respondents expect status quo, as regard the impact of the surging value of the rupee vis-à-vis the US dollar and the volatility being witnessed in the foreign exchange markets.
Despite these developments, the Indian MSME exporter is extremely positive about his export prospects for the next six months, as 71% respondents expect an increase in growth of exports for their company in dollar terms. However, 27% respondents expect export growth to decline while 2% have not responded. Further, 26% of the respondents expect the export growth rate to be between 0-10%, 20% expect the export growth rate to be between 10-20% and 25% expect export growth rate to be more than 20%, in dollar terms, for their companies.
The CII’s detailed report on export trade prospects for the micro, small & medium enterprises was undertaken to analyse the export scenario for these enterprises. The purpose of this survey was to analyse their export performance and the factors that were limiting exports, besides addressing the issues such as the rupee appreciation (volatility in foreign exchange markets), dismantling of quantitative restrictions (QRs), use of intellectual property rights (IPRs) and duty entitlement pass book ( DEPB) for this sector.
Regarding the volume of exports, 51% of the respondents registered an increase in volume of their exports over the past six months, 29% did not see any change in volume of their exports while 20% respondents registered a decline in volume of their exports. In next six months, 59% of the surveyed expect an increase in volume of their exports, 23% expect no change in the volume of their exports, while 18% respondents expect their volume of exports would decline.
Also, around 47% respondents registered an increase in export orders over the past six months, for 30% respondents there was no change in export orders, while 23% reported a decline in their export orders over the past six months. However, the key limiting factors for export growth orders over the next six months of the MSMEs, as revealed by the survey, are exchange rates, international competitions and prices of raw material.