Mumbai, December 09, 2019: With merchandise exports witnessing a slowdown during the past decade, there is a need to focus on newer avenues for export growth from India. According to a study by Exim Bank, project exports is one such sector of opportunities for India. Analysis in the study indicates that contract awards for projects financed by Multilateral Development Banks (MDBs) [World Bank, the Asian Development Bank (ADB), the African Development Bank Group (AfDB), the Inter-American Development Bank and the European Bank for Reconstruction and Development] amounted to nearly US$ 155.7 billion during 2014-2018, indicative of immense opportunities for project exporters in India. Indian companies secured contracts amounting to US$ 21 billion during this period in projects funded by the major MDBs—the ADB, the AfDB and the World Bank funded projects.
The Study has taken an essential first step of evaluating the performance of project exporters in India over the recent years and analysing key aspects of their competitiveness in the international market. Based on a thorough analysis, comprising desk research and survey inputs received from select project exporters, the Study identifies major challenges for the sector in India and recommends pertinent strategies for alleviating these concerns.
The strategies identified in the Study include strengthening Export Credit Agencies [ECAs (Exim Bank and ECGC ltd.)] in India, enhancing success in securing contracts through adoption of consortium approach and encouraging local presence in key geographies, capacity building for project exports by providing timely information on subcontracting opportunities and organizing awareness programs for project exporters, alleviating non-tariff barriers to project exports by giving due consideration to these issues in trade negotiations, addressing data related issues for more informed policy decisions, considering membership in other MDBs such as the Inter-American Development Bank for enhancing India’s market access in lesser penetrated geographies such as the Latin America and Caribbean, and striving towards bridging the infrastructure financing gaps to create more opportunities for project exports.
The Study titled ‘Project Exports from India: Strategy for Reenergizing and Reorienting’ was released by Mr. Piyush Goyal, Hon’ble Minister of Commerce and Industry, Government of India during a two-day seminar organized by the Export-Import Bank of India (Exim Bank) on the theme ‘Building a Roadmap for Boosting Project Exports’ on 8-9 December 2019, in New Delhi. The seminar had speakers from Exim Bank, Ministry of Commerce and Industry, Ministry of Finance, Ministry of External Affairs, international financial institutions, and companies engaged in project exports. The seminar was attended by more than 150 participants from the Indian business community, as also Indian missions of several countries.
Speaking on the occasion, Mr. Piyush Goyal highlighted the efforts taken by the Government of India to reverse the recent slowdown in exports, and enhance competitiveness of Indian exporters in the global market. Mr. Goyal noted that while the government has been actively taking responsive actions to incentivize the exports sector, there is a need for concerted efforts from all stakeholders in pursuing the export targets of US$ 1 trillion by 2024-25. In this context, Mr. Goyal commended the efforts taken by Exim Bank for creating a platform for interaction of stakeholders to identify the challenges and future prospect in the project exports sector, as also to encourage discussions to deliberate on a roadmap for the boosting future project exports from the country.
In his address, Mr. David Rasquinha, Managing Director, Exim Bank further underscored the need for strengthening the financial mechanisms for promoting project exports from the country. Mr. Rasquinha noted that foreign buyers of project exports rarely approach financing as an afterthought. Rather, financing is regularly a core component of evaluating bids and identifying sourcing—complete with weighting scales on relative financing terms. Mr. Rasquinha opined that the ability to secure sizeable, low-interest facilities is an important aspect of securing project exports contracts, and the role of ECAs has been pivotal in providing such facilities. Strengthening the ECA support mechanism in India will therefore be a sine qua non for boosting project exports from the country.