Gujarat: Exports offer lifeline as domestic market flounders

AHMEDABAD: Even as the domestic market continues to face challenges on the demand side, exports have come to the rescue of sectors such as pharmaceuticals, ceramics, chemicals and engineering. Export orders have not only helped these sectors stay afloat but also provided a cushion against slowing domestic demand.
Tile-makers see a surge in exports
Ceramic tile-makers in Morbi — India’s largest cluster of ceramics — shipped tiles worth Rs 2,700 crore in the April-July.All big ceramic players across Gujarat and India are operating at 80-85% capacity as export demand remains robust.
Domestic demand for ceramic tiles continues to languish with slow recovery of real estate industry. The export market is going strong, with many countries looking at sources other than China. There is also pent-up demand in markets.
“With anti-China sentiments across the world, and with the USA imposing heavy duties on tiles from China, we foresee huge export potential for Indian companies,” said Kamlesh Patel, chairman and MD, Asian Granito India Limited. The recent reduction in gas price by the Gujarat government will also make locally made tiles globally more competitive.
“The tile-makers are receiving export orders from the US, UK, Indonesia, Mexico and Europe and the Middle-East,” said Nilesh Jetpariya, president, wall tiles division, Morbi Ceramics Association (MCA).
Pharma exports grow, domestic sales down
Although the pharmaceutical sector was not hit as hard as many others, it is still struggling to regain domestic market growth. After registering a negative sales growth of 12% in April and 9% in May, the medicine sales in the domestic market recovered by 2% in June. The growth, however, was flat in July and further slipped into the red with a fall of 2% in August, according to data compiled by AIOCD AWACS, a market research wing of All India Organization of Chemists and Druggists (AIOCD).
On the other hand, figures from the Union commerce ministry and Pharmaceutical Export Promotion Council of India (Pharmexcil) show pharma exports grew around 20% in July.
Despite logistics and supply-side issues, the pharma exports grew by more than 9% in the April-June quarter and reached the pre-Covid levels in terms of export growth.
While export growth in the pharma sector was less than 1% in April, it bounced back with 10% and 17% growth in May and June, respectively.
Export orders rise in engineering
Engineering goods exports from India surged by about 9% in July. Some companies in Rajkot even had to fly back their skilled labourers from other states to fulfil orders.
With relations between the US and China getting strained, several American and European companies have turned their eyes on sourcing key engineering components from India.
As far as the engineering industry in Rajkot is concerned, the experts say, the share of export orders in overall production has surged to 50% in the past two months. Before the Covid-19 outbreak, the share was 35%.
“There has been strong demand for agricultural tools from African countries. In addition, export orders for auto parts, pumps, valves and bearings have picked up providing a much-needed cushion to the industry in this trying time,” said Brijesh Dudhagara, vice-president of Rajkot Engineering Association. The maximum orders are flowing in from European, American and African nations, said industry players.
Breather for cotton yarn makers
A subdued textile market has left cotton yarn makers struggling for local orders, their exports have grown by 10% in the past two months. “Higher exports demand pushed up capacity utilisation of spinning mills to 70% in July and August. The improvement in exports has helped manufacturers sustain their costs and ensure inflow of revenues,” said Saurin Parikh, president, All Gujarat Spinners’ Association (AGSA).
Ray of hope for garments and apparel
The garments and apparel exports went down in April-July this year, as against the same period in 2019. However, when compared on a month-on-month basis, the readymade garment exports from the country firmed 55% in June and 32% in July. Industry estimates suggest that Gujarat accounts for 7% of India’s apparel exports.
“Since the markets in US and Europe have reopened, orders have started pouring in from the international market in a big way. This helped recover export demand faster than domestic demand,” said Rahul Mehta, chief mentor, Clothing Manufacturers Association of India (CMAI).
(With inputs from Nimesh Khakhariya in Rajkot)