EEPC India
Make In India
NABET
Gandhi
Indian Engineering

About Us > Chairman’s Pen

Chairman

Mr. Ravi Sehgal is the 24th Chairman of EEPC India

 

This meeting delivered some results and the RBI caution listing date was postponed to 31 March 2019; the ‘pre-import’ condition was dropped vide DGFT Notification No.53 dated 10 January 2019 and efforts are now being made to educate the exporters with respect to using the UCO Bank mode for exports to Iran. I hope to continue this dialogue further during my meetings in the month of February 2019 when, among others, the Board of Trade Meeting is also scheduled.

 

As I write, the Interim Budget 2019-20 has been presented by the Union Finance Minister, MrPiyush Goyal. The fiscal deficit is expected to be around 3.4 percent of the GDP while the first step towards a Universal Basic Income (UBI) Scheme for smaller farmers has been initiated. Similarly, income tax exemption has been provided for incomes up to Rs5 lakh per annum. I understand that all the tax-related proposals are likely to be ratified when a full budget is presented by the newly-elected government in July 2019.

 

There is no doubt now that the pace of engineering exports growth has slowed down considerably and the third quarter has shown negative growth. While detailed analysis of the trend is provided in the following pages, three critical segments have held back the potential that is there: primary iron and steel exports; copper and copper products exports; and zinc and zinc products exports. Of the three, the first two are the result of market imperfections and an exogenous factor respectively. EEPC India has been continuously hammering the point that while most segments of engineering face the vagaries of the market, domestic steel prices are not ‘market determined,’ resulting in higher prices making downstream value added uncompetitive in global markets. The other impact, now that the international steel prices have fallen, is that the Indian steel majors are catering only to the domestic sector, cutting back on their exports.

 

With respect to copper products exports, the closure of the Tuticorin plant has led to 40 percent drop in production of copper products while imports of refined products have increased. From a net exporter of refined copper, we have now become a net importer. With respect to zinc, there was a fall in domestic production, which hopefully is a short-term phenomenon. Clearly, we need to work out alternatives and some of the suggestions that we have been making to the government, if implemented, can help to some extent in the promotion of the rest of the engineering products. These are products where domestic production and external conditions do not face such negative externalities.

 

On our part, we will continue to promote engineering goods and the eighth edition of the International Engineering Sourcing Show, IESS VIII, scheduled over 14-16 March 2019, will be one such effort to give a major thrust to the promotion of sourcing of engineering products from India, showcasing technological advancement and future technologies, especially for our MSME units.

 

Malaysia is the Partner Country in IESS VIII being held in Chennai. Malaysia, with Asia’s eighth best and the world’s 25th best overall infrastructure, Southeast Asia’s fourth-largest and world’s 38th-largest economy, has one of the best economic records in Asia since its independence with its GDP growing at an average of 6.5 percent per annum for almost 50 years.

 

As both Malaysia and India are moving towards a technology-driven automotive industry equipped with shared mobility, connectivity, electrification, and autonomous driving, this is the most appropriate time for Malaysia Automotive, Robotics and IoT Institute (MARii) to play a lead role to participate in a global forum like IESS.

 

Malaysia’s participation is expected to be a major game changer at IESS 2019, anticipating greater collaborations between MARii and Indian companies and the creation of a technology ecosystem between the two countries.

 

I urge our readers to join us in IESS VIII and benefit from the bouquet of the programmes we are going to present at this mega show.

After two consecutive years of exceptional export growth, Indian engineering industry has been performing below par in the current fiscal. India’s total engineering exports in the current fiscal (April to January) remains only at $64 million, 2 percent less than that of last year. The performance is largely due to a depressed global trade scenario, a result of ongoing trade disputes and protectionist stance adopted by major markets. To reach last year’s export figure of $81 billion by the end of this fiscal, the shortfall of $17 billion needs to be addressed and with just two months left to the end of the fiscal year, whether the industry will be able to mitigate this shortfall remains an important question. Going by previous trends the last two months of a fiscal generally records higher export growth on average than the other months; hence the industry remains hopeful of recovery.

When current global trade is reeling from the impact of the Novel Coronavirus or COVID-19 outbreak, recovery in such a short time remains doubtful. The Coronavirus outbreak has quickly spiralled into a global crisis. Globalisation has encouraged companies to build supply chains that cut across national borders, making economies much more interconnected. The Chinese economy constitutes around 20 percent of global GDP and has emerged as one of the top suppliers globally. A recent D&B report found that at least five million companies around the world have some sort of supply connection in the impacted regions of China. Therefore, as the Chinese government enforced closure of business in the affected regions which as per the report accounted for over 90 percent of all active businesses in China, it disrupted major supply chains across the world. The WTO has also predicted ‘substantial’ impact on global trade which would be reflected in the data. IMF is likely to downgrade the growth forecast due to the outbreak. We strongly hope and pray for a quicker solution to the crisis so that global meltdown can be arrested.

This brings us to the question of how Indian engineering industry may get affected due to the outbreak. Given that China is a major trade partner for India especially in the engineering sector, there is some scepticism in the industry. In this context, I must commend our government’s role in safeguarding our industries from these disruptions. The government has already started consulting the industry to identify the supply chain issues that Indian businesses may face. Simultaneously, through Indian Missions abroad, the government is engaging with industries in various countries to identify areas where Indian exports can replace disrupted Chinese supplies. The information gathered is being regularly shared with the export promotion councils and industry associations and members are encouraged to act upon them.

This issue of the magazine covers both the short- and long-term possible fallout of the Coronavirus outbreak on Indian businesses, and the engineering sector in particular. While there is no question of benefiting from a large-scale human tragedy, it is better that we are prepared to tackle the issues arising from such global emergencies.

The focus of this edition is India’s electrical machinery and equipment sector and how the government is taking steps to enhance the performance of the sector. It also delves into the current status of India’s copper industry after the closure of Vedanta’s Sterlite Copper plant in Tamil Nadu.

Let me end this on a positive note. The ninth version of Indian Engineering Sourcing Show (IESS) – the biggest engineering sourcing show in India – has just concluded in Coimbatore, Tamil Nadu. Despite the recent Coronavirus scare and consequent travel restrictions, the show has been successful in attracting a significant number of global buyers and exhibitors. We have had tremendous response from all the participants. I take this opportunity to thank all our members and participants who attended and made the event a success. I would also like to congratulate Team EEPC India for pulling off this event successfully in such difficult times. I hope that we continue to take such successful strives in the future.

I hope our readers will enjoy reading this edition of the magazine and do write to us with your views and thoughts, as always.

LinkedIn Pinterest You-tube