Determinants of Export Performance: Case of Indian Manufacturing Firms

Abstract

This paper reports the findings from an analysis of the determinants of exports performance based on a sample of nearly 4500 Indian manufacturing firms for the period 2001-2011. The determinants of exports performance in Indian manufacturing firms are analysed econometrically using Tobit model, in particular, the role of financial variables, which has been largely overlooked by previous studies. The explanatory variables considered include firm size, leverage, and cash-flow by sales ratio, labour intensity, and profit by sales ratio, R&D by sales ratio, and foreign equity. The paper additionally examines how global crisis has affected the export performance of different types of Indian manufacturing firms distinguished on the basis of size and extent of leverage. The result show that high leveraged firms were more at risk and suffered more because of the crisis than low leveraged firms. It implies that firms with lower level of debt in their capital structure were better insulated from the damaging impact of the crisis on export intensity.  Similarly, the recession affected small sized firms the most, followed by medium sized firms, with the large firms having relatively the highest immunity against the detrimental impact of crisis.