INTRODUCTION TO THE PROJECT

This project comprises of a study on export performance of India with special emphasis on Export performance of Indias primary goods and manufacturing goods.

OBJECTIVE OF THE STUDY

To undertake a study of composition of exports of India. To study the export performance of India. To understand the factors affecting exports of India. To analysis the share of Indias export in world trade.

RESEARCH METHODOLOGY
Collection of data Secondary data: The methodology for collection data with reference to the secondary data was taken from the different Published Books, Journals, Articles, Magazines and E-Data.

LIMITATIONS OF THE STUDY

This Project does not involve a detail study of Export Performance of India. The Project involves detail study on Export Performance of Indias Primary Goods and Manufacturing Goods, not in context to other exported goods.

Introduction Export: To send goods and services across national frontiers for the purpose of selling and realizing foreign exchange. A function of international trade whereby goods produced in one country are shipped to another country for future sale or trade. The sale of such goods adds to the producing nations gross output. If used for trade, exports are exchanged for other products or services, export are one have f the oldest forms of economic transfer and occur on a large scale between nations that fewer restrictions on trade, such as tariffs and subsidies. The export regulations define an export as: Any oral, written, electronic or visual disclosure, shipment, transfer or transmission outside of the India to anyone, including a Indian citizen, o any commodity, technology (information, technical data, or assistance) or software/codes Any oral, written, electronic or visual disclosure, transfer or transmission to any person or entity of a controlled commodity, technology or software/codes with an intent to transfer it to a non- Indian entity or individual. Any transfer of these items or information to a foreign embassy or affiliate.

Importance of exports:
Exports are important for all countries, whether developed or not. The need and importance of exports for a nation is explained as follows: 1) Foreign exchange:

Exports enable a nation to earn valuable foreign exchange. The foreign exchange can be utilized for: 2) Imports of consumer goods Import of raw materials, spares and components Import of capital goods and technology Servicing of debt International relations:

Exports help to develop international ties with importing countries due to the following reasons: The international trade brings together the exporters and importers of various

countries. 3) Trade talks take place between nations at international forums like WTO. Also, trade agreements are signed between governments of participating countries. Balance of payments:

A countries external economic strength depends upon its balance of payment position. Naturally, every country would like to have a strong and favourable balance of payment position. Since exports bring in foreign exchange, it helps a country to solve and improve its balance of payments position.
3

4) Reputation in the world: Export brings reputation and goodwill for a nation in the international market. For instance: Japan commands reputation for electronic products. India has goodwill for handicraft including gems and jewellery. Germany is famous for engineering goods.

5) Employment: Export helps to generate employment in the country. Export facilitates: Direct employment in the export sector. Indirect employment in the supporting sectors such as banking, insurance , transport etc.

6) Research and development: In international market, quality of product is of utmost importance therefore, government provides assistance to exporters to undertake research and development. R&D helps to: Reduce cost Improve quality Develop new products

The fruits of R&D benefit the consumers not only in the overseas markets but also in the domestic markets. 7) Regional development:

Export facilitates regional development. For instance, about 1/3 of Indias exports are from small scale sector. The small units are located throughout India. Therefore, export sector contributes towards regional development of a nation. 8) Optimum use of resources: Export facilitates optimum use of resources in the country such as: Physical resources such as materials, machines etc. Capital resources Manpower

For instance, gulf countries have excess supply of petroleum, which is exported, thereby making of optimum use of resources. 9) Standard of living: Export increase demand, which leads to higher production and distribution. Increase in production and distribution generates more employment. Increase in employment leads to higher purchasing power with the people. Therefore , people can enjoy new and better product, which improve standard of living. 10) Economic growth: Exports contribute to the economic growth of a nation. Due to exports, the demand increases. Increase in demand leads to higher production. Higher production increases GDP of a nation. 11) Spread effect:

Because of the export industry, other sector also expands such as banking, transport and insurance etc. At the same time number of ancillary industries comes into existence to support the export sector.

Export performance of India

Exports have acquired added significance in the wake of liberalization wave sweeping across the world. The trend towards market economy in all most all the countries of the world has increased the role of exports in developmental efforts. Exports have become an important indicator of a countrys economic performance. Although non-traditional items (gems and jewellery, readymade garments, engineering goods and chemicals) have entered into Indias exports in a big way yet traditional items of exports, viz. marine products, tea, coffee, spices and coir occupy a dominant place in our export basket. These items have been the backbone of Indias export efforts for long. Export performance during the Ninth Five Year Plan (1997-2002) was less than satisfactory and this fact was well documented in the Tenth Five Year Plan (2002-2007) which observed that the Ninth Plan had envisaged a growth of 11.8% p.a. in exports, against which the actual growth was 5.6% during the Ninth Plan period. The year 2000-2001 witnessed a growth of 19.6% but declined sharply to 0.05% in 2001-2002.the drastic reduction in growth rate of exports during 2001-2002 was primarily due to structural constraints operating on the demand as well as on the supply side. Exports recorded high growth during the first half of 2008-09 although a deceleration was witnessed during the subsequent months due to global economic slowdown. During 2008-09 (Apr-Sept) exports grew by 48.1 per cent with almost all the major commodity groups, except marine products, handicrafts recording significant
6

growth. In the second half of the year 2008-09 (Oct-Mar), exports declined by (-) 14.7 per cent with almost all the major commodity groups, except Gems & Jewellery, RMG, Electronics goods, recording significant negative growth. Commodities like Engineering Goods, Other basic Chemicals, Man-made Yarn, Leather & Leather Manufactures, and Spices which recorded overall positive growth during the year, as a whole, also recorded negative growth during the second half. However, despite the significant decline in the second half of the 2008-09, exports registered an overall growth of 13.6 per cent for the year.

Indias export of principal commodities:

Indias export to principal regions:

Composition of exports
Primary products: Indias export of primary product mainly consists of agricultural and allied products and ore and minerals. Agricultural products: Agricultural sector is the mainstay of the rural Indian economy around which the socio economic privileges and deprivations revolve, and any change in its structure is expected to have a corresponding impact on the existing pattern of social equality. The growth of Indias agricultural sector during the 50 years of independence remains impressive at 2.7% per annum. Agriculture and Allied Products as a group include Cereals, Pulses, Tobacco, Spices, Nuts and Seeds, Oil Meals, Guar gum Meals, Castor Oil, Shellac, Sugar & Molasses, Processed Food, Meat & Meat Products, etc. During 2009-10 (AprilSeptember), exports of commodities under this group registered a negative growth of 34.1 per cent with the value of exports falling from US $ 8613.8 million in the previous year to US $ 5675.2 million during the current year.

Ores and Minerals

Exports of Ores and Minerals were estimated at US $ 2884.1million during 2009-10 (AprilSeptember) registering a negative growth of 35.5 per cent over the same period of the previous year. Sub groups viz. Processed Minerals, has recorded a negative growth of 28.9 per cent and Coal a positive growth of 40.4 per cent respectively. Mica has registered negative growth of 27.7per cent.
9

Manufacturing goods: Indias export of manufacturing goods mainly consists of Gems and jewellery, Engineering goods, Chemicals and related products, Leather and manufactures, Textiles and Textiles products.

Gems and Jewellery

The export of Gems and Jewelry during 2009-10 (April-September) decreased to US $ 13608.4 million from US $ 17387.7million during the corresponding period of last year showing a negative growth of 21.7 per cent.

Recent export measures:

The sustained buoyancy in the export of Gems and jewellery continuing policy initiatives:

reflected the effects of

Import of gold of 8 carat and above allowed under the replenishment scheme subject to

the import being accompanied by an assay Certificates specifying the purity, weight and alloy content; Duty free import entitlement of consumables for metals other than gold and platinum at

2% of FOB value of exports during the previous financial year; and Duty free import entitlement of commercial samples at 3 lakhs; Duty free re import entitlement for rejected jewellery at 2% of the FOB value of exports;

10

Cutting and polishing of gems and jewellery treated as manufacturing for the purpose of

exemption under section 10A of the income tax act.

Chemicals and Related Products

During the period 2009-10 (April-September), the value of exports of Chemicals and Allied Products decreased to US $ 10550.0 million from US $ 13228.1 million during the same period of the previous year registering a negative growth of 20.2 per cent. Rubber, Glass & Other Products; Residual Chemicals & Allied Products and Basic Chemicals, Pharmaceuticals & Cosmetics and Plastic & Linoleum have also registered a negative growth.

Engineering Goods

Items under this group consist of Machinery, Iron & Steel and Other Engineering items. Export from this sector during the period 2009-10 (April-September) stood at US $ 15143.7million compared with US $ 23214.0 million during the same period of the previous year, registering a negative growth of 34.8 per cent. Export of Machine Tools and Transport Equipment has registered negative growth of 42.6 and 19.1 per cent respectively.

Electronic Goods

During the period 2009-10 (April-September), exports of Electronic Goods as a group were estimated at US $3086.8 million compared with US $ 3828.2 million during the corresponding period of last year, registering a negative growth of 19.4 per cent.
11

Textiles

During the period 2009-10 (April-September), the value of Textiles exports was estimated at US $ 8657.3 million compared with US $ 10151.5 million in the corresponding period of the previous year, recording a negative growth of 14.7 per cent. The export of Natural Silk Textiles registered a negative growth of 31.0 per cent and Manmade Textiles & Made Ups has shown a positive growth of 2.4 per cent.

Handicrafts and Carpets

Exports of Handicrafts declined to US $ 94.6 million during 2009-10 (April-September), from US $ 167.2 million during the corresponding period of the previous year registering a negative growth of 43.4 per cent. Export of carpets increased marginally to US $ 437.8 million from US $ 427.9 million during the same period last year registering a positive growth of 2.3 per cent.

Project Goods

During 2009-10 (April-September), the export of Project Goods were estimated at US $ 63.5 million compared with US $ 118.6 million during the corresponding period of last year registering a negative growth of 46.4 per cent.

The challenges for Indian project exports include:

Relatively lower ability to compete with many other countries, including developed ones

and china, in the absence of competitive credit; Lack of experience in handling barter deals and counter-trade practices; and
12

Low levels of effective and strategic tie-ups with reputed international consultancy firms

and quality accreditation.

Petroleum Products

Export of Petroleum Products decreased to US $ 10579.8 million during 2009-10 (AprilSeptember), as compared with US $ 18721.4 million during the same period of last year recording a negative growth of 43.5 per cent.

Leather Exports

The leather industry holds a prominent place in the Indian economy. The sector is known for its consistency in high export earnings and is among the top ten foreign exchange earners for the country. Indias leather exports touched US$ 3.84 billion in 2010-11, recording a cumulative annual growth rate (5 years) of about 5.87% . The industry provides employment to about 2.5 million people, mostly from the weaker sections of society. Women workers are predominant in the leather products sector with about 30% share.

13

Composition of Indias leather & leather products export basket (2010-11) can be seen in Chart given below

Composition

of

Indias

Leather

and

Leather

Export

As per officially notified DGCI& S monthly export data, the export of leather and leather products for the period April-Nov 2011 touched US$ 3092.02 million as against the export of US$ 2398.32 million in the corresponding period last year, registering a positive growth of 28.92%. In rupee terms, the export touched 143613.68 million during April-Nov. 2011 as against the previous years performance of 109655.40 million registering a positive growth of 30.97%.

14

Statement showing the Product-wise Export performance during April-Nov 2011 vis--vis April- Nov. 2010 is given in below Table

Product-wise Export Performance

Category

April-Nov 2010

April-Nov 2011 660.77 1057.35 190.71 376.42 690.93 70.18 45.67 3092.02

% Variation

Finished Leather Leather Footwear

542.11 875.41

21.89% 20.78% 35.88% 56.78% 34.93% 32.21% 29.71% 28.92%

Footwear Components 140.35 Leather Garments Leather Goods 240.10 512.06

Saddlery And Harness 53.09 Non-Leather Footwear 35.21 Total 2398.32

15

Factors affecting the export performance of India:

There are two types of factors affecting the export performance of India classified as follows: Factors Affecting the Demand for Export:

There is a multitude of factors that are likely to affect the demand for India's exports of goods and services as seen below. Growth Performance of World Economy and Key Trading Regions:

The growth rates of the world economy and world trade do influence the overall demand for India's exports. For instance, the rates of stagnation in the growth rate of world trade in the period since 1996 have affected the growth of India's exports. Some broad correspondence between the growth rates of world trade and Indian exports is evident. Depending upon the intensities of India's trade relations the growth prospects in these specific regions may also affect the demand for India's exports. The regions which may be particularly important for India's exports include North America, the European Union, Middle East, East and Southeast Asia and South Asia. Therefore, it will be important to watch the growth outlook and projections for these regions. WTO Agreements:

Since the implementation of the Final Act of the Uruguay Round in 1995, the WTO Agreements have become important factors in determining the patterns of world trade. Their full impact is not yet obvious as many provisions of these agreements are yet to be implemented because of the transition period provided. Most of the remaining provisions of the WTO agreements would be implemented in the coming five years. Therefore, the patterns of trade in 2020 would have to be speculated keeping in mind

16

the impact of full implementation of the WTO agreements. Some of the agreements which are likely to affect India's exports are the following. A) Agreement on Textiles and Clothing:

The Agreement on Textiles and Clothing (ATC) proposes to phase out the MFA quotas imposed by the developed countries on the imports of textiles and clothing from developing countries over a period of 10 years ending on 31st December 2004. Given the fact that India has substantially fulfilled her quota for the products coming under MFA, it may appear that the phasing out of these quotas would help in the expansion of exports. However, the impact of the phase out is likely to be a mixed bag. This is because with MFA phase out, Indian exporters would be competing directly with other exporters of textiles and garments such as China, Korea, Taiwan, Pakistan, Thailand, Turkey, Mexico. Therefore, while ATC provides an opportunity to Indian exporters to expand their exports of textiles and garments by removing the quota restrictions, it also poses a challenge of increased international competition. b) Agreement on Agriculture (AoA): The AoA proposes to liberalize the international trade in agriculture by restricting the agricultural subsidies provided by governments to the farmers, reduction in export subsidies in agriculture, removal of QRs and establishment of tariff rate quotas applicable to trade in agricultural commodities. In general Indias obligations under AoA are limited given the low level of agricultural subsidies compared to EU and the US. It is believed that implementation of the AoA commitments by industrialized countries will benefit countries like India in terms of market access for some agricultural commodities.
17

c) Trade Preferences for the Least Developed Countries: One emerging development in the WTO system has been the tendency to divide the developing countries with the offer of special trade preferences for the least developed countries. A sizeable proportion of India's exports still comprise labour and resource intensive goods that are also exported by some of the least developed countries. If successful these preferences have the prospects of diverting trade from India to the least developed countries. The potential of these trade preferences for adversely affecting Indias exports needs to be kept in mind. China's Accession to WTO:

One of the important events of the coming years for the world trade may be the entry of China into the WTO regime. China signed an agreement with the US for its entry into the WTO in November 1999. It has subsequently been negotiating such agreements with other WTO members. The accession of China to the WTO and hence the MFN status that it will receive from other WTO countries may have some implications for the competitiveness of India's exports. This is because India and China compete in the international market for a number of labour intensive and matured technology goods such as textiles and garments, leather goods, light engineering products, chemicals and pharmaceuticals, among others. China has already been giving tough competition to Indian exports in many commodities and markets. There is a view that the accession to WTO may further strengthen Chinas competitiveness and hence may affect the Indian exports adversely. Preferential Trade Arrangements/Free Trade Arrangements in Rest of the World:

18

The last decade and a half has seen the proliferation of regional trading arrangements in different parts of the world. The major trading blocks that have emerged over the years include the European Union, NAFTA, Mercosur, AFTA, COMESA, among others. Besides, these free trade and common market agreements, a number of other countries have become integrated with the trading blocks through a variety of preferential or free trade arrangements. For instance, European Union has extended free trade agreement treatment to a number of Central Eastern European Union and Mediterranean countries in anticipation of full membership to these countries in the EU. These arrangements could also act to divert trade away from India especially in the labour intensive goods, as indicated earlier in the case of textiles and clothing. Regional/Bilateral Free Trade Arrangements:

India has taken several steps to liberalize trade with her trading partners in the South Asia region on regional as well as bilateral basis. These steps include participation to SAARC Preferential Trading Arrangements (SAPTA) that came into being in December 1995. Under this Agreement, India has exchanged trade concessions with the SAARC member countries for nearly 3000 commodities in the first three rounds of negotiations. The fourth round of these negotiations is in the process. It is expected that the process of trade liberalization in the framework of SAARC will culminate into a South Asia Free Trade Agreement (SAFTA), although, it may take some time to take shape given the current impasse in the SAARC process. Besides SAPTA, India has recently signed a bilateral free trade agreement with Sri Lanka. India already has bilateral free trade agreement with Nepal and Bhutan. A bilateral free trade agreement is being contemplated with Bangladesh as well. There are other attempts of regional/sub-regional economic integration which may also come into
19

being in the coming decade, for instance, BIMST-EC (Bangladesh, India, Myanmar, Sri Lanka and Thailand Economic Cooperation) which has been formed recently may adopt a preferential trading arrangement between the member countries. Although India is also a founder member of the Indian Ocean Rim Association for Regional Cooperation (IOR-ARC), a preferential trading arrangement is not contemplated as the Association has adopted the concept of open regionalism on the lines of APEC. All these attempts at free trade with the regional partners may open the markets for Indian goods further in the countries concerned. It is evident that the share of South Asian countries in India's exports has increased from 2.73 to 4.9 over the period 1990 to 1999. The recent initiatives in regional/ bilateral trade liberalization may help to divert some trade of the countries concerned from their other trading partners in favour of India given the supply capabilities. Factors affecting supply of exports: Infrastructural Bottlenecks:

It is widely accepted that India's export potential remains considerably unfulfilled because of infrastructure bottlenecks such as power shortages, port handling facilities, delays in transportation which in turn are due to poor transport links within the country and poor communication facilities. The inability of Indian exporters in meeting supply schedules costs dearly in terms of image of India as a reliable source of supply. Not only that the availability of the infrastructure services is inadequate but the efficiency and quality of the delivery of what is available is highly uneven. The ability of the government in removing these constraints in the coming years will also determine the supply side of Indian exports.

20

Growth of domestic demand:

A rapid growth of domestic demand may also affect India's ability to export at least in certain products, for instance, in tea where the rapid growth of domestic demand is expected to reduce the export surplus in the coming years. It may also apply to a number of other agricultural commodities such as rice, cotton, among others. Inflows of Export-oriented Foreign Direct Investment:

Multinational enterprises (MNEs) have played an important role in the rapid growth of manufactured exports from the East and South-East Asian countries. This is because the South East and East Asian countries were able to attract export platform investments from US and Japanese MNEs in the 1970s and 1980s. The export platform or export-oriented investment arises in the process of relocation of production by MNEs abroad in order to maintain their international competitiveness in the face of rising wages and other costs in their home countries. India has not been able to exploit the potential of MNEs for exportoriented production. MNEs can play an important role in promotion of India's manufacture exports with relocation of export platform production in the country with their access to global marketing networks, best practice technology and organizational know-how. To some extent, therefore, India's ability to attract export-oriented FDI will determine the magnitude of India's exports.

WTO Regime:

Some of the WTO Agreements also have the provisions that are likely to affect the supply of Indias exports as discussed below:

21

a)

Phase out of QRs and dividend balancing under TRIMs:

A number of companies especially MNE subsidiaries were prompted to export in the previous trade regime by the need to earn import licenses or by dividend balancing condition imposed on 22 consumer goods industries. With the removal of QRs and the dividend balancing requirements to fulfill Indias commitments under WTO Agreements, those exports will not be necessary any more. Hence, export-orientation of some companies may come down. b) Agreement on Sanitary and Phytosanitary (SPS) Measures:

The Agreement on Sanitary and Phytosanitary (SPS) Measures, aims at uniform standards for the protection of human, animal and plant life or health. The Agreement provides a transition period to developing countries for complying with the provisions. SPS measures are likely to affect Indias ability to export high-value food products and perishables. Thus, there is no alternative but to align standards in accordance with international norms. Exchange Rate Alignments:

The competitiveness of Indias exports is also likely to be affected by the alignments in the exchange rates. The future trends in the parities of not only the major currencies such as dollar, euro and yen but also currencies of Indias major competitors in specific product / market segments will affect the competitiveness of Indias exports.

22

Problems faced by Indian exporters:

1) Recession in the world markets:

The world markets faced recession in 2008 and in the first half of 2009. The recession was triggered due to sub-prime crisis of USA in September 2007. Due to recession, the demand for several items such as gems and jewellery, textiles and clothing, and other items were badly hit. During recession, exporters get low orders from overseas markets, and they have to quote lower prices. Therefore, exporters get low profits or suffer from losses. 2) Protectionist measures by developed countries:

The developing countries like India have to face the problem of protectionist measures by developed countries. For instance, in 2009, USA govt provided a bailout package to General Motors and other firms to overcome from financial Crisis. The bailout packaged contained Buy American Clause which means the firms getting financial assistance from the Govt have to use domestic content rather than importing from other countries. Since USA is the major importer from India, some of the exporters such as Auto parts suppliers have to face problems. 3) Reduction in Export Incentives:

Over the years, the Govt of India had reduced export incentives such as reduction in DBK rates, withdrawal of income tax benefits for majority of exporters, etc. the reduction in export incentives demotivates exporters to export in the overseas markets. 4) Competition from China:

India is facing stiff competition from China in the world markets, especially in the OECD markets. As a result, Indias share of Exports to OECD markets has declined from 53% of
23

total exports in 2000-01 to about 38% in 2007-08. Some of the Indian exporters have lost their overseas contracts due to cheap Chinese goods and supplies. 5) Problem of product standard:

Developed countries insist on high product standards from developing countries like India. The product from developing countries like India are subject to product tests in the importing countries. At times, the importing countries do not allow imports of certain items like fruits, textiles, and other items on the ground of excessive toxic content. Therefore, Indian exporters lose markets especially developed countries. 6) Problem of anti-dumping Duties:

Developed countries impose anti-dumping duties on certain goods imported from developing countries like India, Brazil, China and so on. For instance, USA had imposed anti-dumping duties on Indian steel items in 2008. Quite often, the anti-dumping duties are not justified. Therefore, India has to approach the dispute settlement body of WTO to resolve the dispute regarding anti-dumping duties. Till the dispute is resolved, Indian exporters lose business opportunities. 7) Problem of sea pirates attacks:

A major risk faced by international trade is attack by pirates in the Gulf of Aden. More than half of Indias merchandise trade (export and import) passes through the piracy infested Gulf of Aden. New exporters and importers are facing problems because of increased pirate attacks as they find it difficult to get insurance cover.

24

8)

Problem of subsidies by Developed Countries:

The developed countries like USA provide huge subsidies to their exporters. For instance, in case of agriculture exporters, USA, UK and others provides huge subsidies to their exporters. Therefore, the exporters of developing countries like India find it difficult to face competition in the world markets. 9) Documentation formalities:

There are a number of documents to be prepared in export trade. In India there are as many as 25 documents (16 commercial documents and 9 regulatory documents) to be filled in. however, aligned documentation system (ADS) has simplified export Documentation procedure. 10) Foreign exchange regulations:

Export is subject to foreign exchange regulations. For instance, in India, the exporters have to give a declaration in form GR to the Reserves Bank of India (RBI) that they will realize the full value of exports within a period of 180 Days.

25

Reasons for Indias Poor Share in World Trade

Indias export performance is poor. Over the years, since Independence, Indias share of the world export has been very low. At present, Indias share of world export is 1%. The share of exports of other developing countries of Asia, namely China, South Korea, Malaysia Singapore and Thailand is much more than of India. There are several reasons for poor performance of Indias export trade. The reasons or causes can be broadly divided into two groups, as shown below: 1) a) Export related problems: Poor quality:

One of the main reasons for poor performance of Indias export trade is due to the poor quality of products. A good number of Indian exporters, especially, the small scale exporters do not give much importance to quality control. Due to problems in quality, the Indian exporters do not get orders from foreign buyers. There are also cases, where Indian goods are rejected and sent back to India by foreign buyers. b) High prices:

The price of Indian goods is higher as compared to other Asian countries. The price of Indian export is high due to: Higher values of Indian rupee vis--vis the value of some other Asian countries such

as Malaysia, Thailand, Philippines, etc Some of the Indian exporters quote higher prices in order to make higher profits per

unit sold. The price of Indian goods is also affected by high transaction costs, and

documentation formalities.
26

c)

Inadequate Promotion:

Promotion is vital for exports. However, a good number of Indian exporters do not give much importance to promotion. Apart from advertising and sales promotion, Indian exporters must participate in trade fairs and exhibitions. But in reality, a good number of Indian exporters are not professional in advertising and sales promotion. They also do not take part in trade fairs and exhibitions, and if they do so, they lack professional approach in handling the visitors at the trade fairs and exhibitions. d) Poor follow up of sales:

There is often poor follow up of sales. The Indian exporters do not bother to find out the reactions of the buyers after the sale. They are also ineffective in providing after sales service. As a result there is poor performance of Indias export trade. e) Poor negotiations skills:

Indian exporters, especially the small exporters lack negotiation skills. Due to poor negotiation skills, they fail to convince and induce the foreign buyers to place orders. The lack of negotiation skills is mainly due to poor training in marketing and negotiation skills. 2) a) General Causes: Poor infrastructure:

The infrastructure require for export of goods is poor. Due to poor infrastructure facilities, Indian exporters find it difficult to get orders, and also to deliver the goods at the right time. The poor infrastructure facilities include: Poor port handling facilities Inadequate warehousing facilities Poor transport facilities, etc

27

b)

Presence of good domestic market:

In India there is a good domestic market. Sellers find a ready market for their goods within the country. Therefore, they do not take pains to get orders from overseas markets. However from the long term point of view, Indian marketers should look beyond domestic markets, and enter in the export markets. c) Documentation and formalities:

In India, there are number of documentation and other formalities, some of the marketers do not enter the export field. Therefore, there is a need to simplify and reduce formalities and documentation work on the part of government authorities. d) Negative attitude of overseas buyers:

Some of the overseas buyers, especially from developed nations have a negative attitude towards Indian goods. They are of the opinion that Indian goods are of inferior quality, and that the Indian exporters provide poor service after sales. Therefore, there is a need to correct this negative attitude through effective promotion and good marketing practices. e) Problem of trading blocs:

Indian exporters are affected due to presence of trading blocs. There are some powerful trading blocs in the world such as NAFTA, European Union (EU) and ASEAN. The trading blocs reduce or eliminate trade barriers on member nations, whereas, they impose the trade barriers on non-members. Since India is not a member of the powerful trading blocs, Indian exporters do face problems to export goods to the member countries of the trading blocs.

28

Competitiveness of exports:
Exports of a country are deemed to be competitive if the country is able to sell its products at a lower or same price and earn the same return as its competitors. Export competitiveness of a country is determined by the following factors: Favourable endowment base in the economy Lower cost of consideration, Better quality of the commodity produced, Remuneration of factors of production, Exchange rate Productivity through the use of better technical and human resource development, Economies of scale and Institutional and policy mechanisms.

Analysis of competitiveness of manufactured exports, as measured by a menu of indicators, reveals that India has comparative advantage with respect to some key indicators, viz. real exchange rate, labour productivity and unit labour cost. In fact, the unit labour cost of manufacturing exports in India is one of the lowest among the developing countries. It is expected that the future export drivers India will be textiles, engineering goods, including automobiles and capital goods and processed food items.

29

Conclusion
It is concluded that non-traditional items (gems and jewellery, readymade garments, engineering goods and chemicals) have entered into Indias exports in a big way yet traditional items of exports, viz. tea, coffee, spices and coir occupy a dominant place in our export basket. These items have been the backbone of Indias export efforts for long. In the Indian context exports are still seen to be primarily supply-side determined. Although demand related factors, like exchange rate movements and world incomes are becoming progressively more important, particularly for specific export items, the dominant factor continues to be the ability of the economy to produce adequate volumes of exportables to address international markets. International income levels still do not appear to matter significantly, reflecting the low share of Indian exports in international trade.

30

Bibliography
BOOKS: Vibha Mathur, 2006, Foreign Trade of India, new century publications.

WEBSITES: www.google.com www.wikipedia.com www.scribd.com

31