Poor Infrastructure Hampers India's Export Chances in Downturn BANGALORE - On the outskirts of Bangalore, Karnataka, in a manufacturing unit for Indo-US MIM Tec Private Limited, dozens of workers in blue uniforms stood behind tall, nearly noiseless machines. The equipment pumped and swerved, quietly fusing bits of metal and polymer. Founded in 1997, the company builds a range of parts for cars, factories and consumer goods using a rare manufacturing technique called metal injection molding. It pioneered the technique in India, and claims to be the world's largest practitioner. Shivashankar T.S., 41, the company's vice president of operation, bounded across his plant like a proud parent. He stopped at one production unit and showed off its final product: a small silver widget, bound for a sports car in Canada. Rows of sharp, tiny triangles sat on shelves nearby. An American company will soon set them atop long crossbows it can sell to eager game hunters in the United States. In the adjacent building, metallic slabs used in commercial airplane wheels wait to be fastened in Dubai. Two years ago, Indo-US MIM poured in over $2 million to add an aerospace component division. Mr. Shivashankar detailed the molding mechanics briskly in a highly technical language; his voice brimmed with giddy reverence for his plant's technical prowess. If any business in India should be giddy today, it is his. Economic growth has plummeted and the rupee has gone with it, losing a fifth of its value against the dollar since May. When a country's currency deflates, textbook economics says the country's exports should boom, as its goods will be cheaper in overseas markets. Indo-US MIM ships more than 90 percent of its production of parts for automobiles, medical and aerospace industries abroad to 65 countries. Production costs at home - the rent on two plants and salaries for 1,800 employees - are paid in rupees. The payment for the company's exports is in dollars or euros. But Indo-US MIM isn't experiencing an export euphoria. Its molding technique requires advanced machinery and five rare metal powders. For its high-tech needs, it must look outside of India. "When the rupee tanks, we take a hit on raw materials," said the company's chief executive, Krishna Chivukula Jr. Mr. Chivukula now faces the frustrating predicament of many Indian exporters: standing beneath the economy's one bright spot, when exports are suddenly poised to blossom, they're unable to seize it. India's current economic crisis illuminates the country's familiar weakness in industry next to its neighbors. When the East Asian crisis struck in 1997 and 1998, the affected nations, whose currencies rapidly sank, got back on the road to recovery through their exports. India's odds of repeating the tactic now appear very low. Many of its export industries with the most growth potential lack the basic infrastructure to expand. Without an earlier manufacturing boom, the country is now bereft of companies that can build the things its builders need. And these exporters can't escape the costs of doing business in India - the rising price of goods, political torpor. As the rupee collapsed, some exports have picked up. In July, exports reached $25.8 billion, up from $23.1 billion in July 2012 , according to the commerce ministry. Pharmaceuticals, textiles and agricultural goods, like wheat, netted solid gains. Yet a dour report, released on Monday by HSBC, noted that Indian manufacturing shrank in August to its lowest levels in over four years. Demand for exports contracted as well. More critically, India's imports in July, the most recent month of data, have not slowed enough to curb its bruising trade deficit of $12.27 billion, the same total as in June. Some industry leaders maintained the trade gap will slim in the coming months as the rupee depreciation settles. Spurts in exports in large-scale industries tend to lag. For an Indian manufacturer with imports below 40 percent of production costs the rupee slide is a gift, argued J. Crasta, regional head of the Associated Chambers of Commerce and Industry, a business lobby in Karnataka, one of the five states in India that account for 63 percent of the country's exports, by the latest figures. Mr. Crasta said that his company, CM Envirosystems, which makes testing chambers built mostly from domestic parts, has seen a threefold increase in exports so far this year. "It is now an opportunity for all the industries to look out for exports," he said. Still, many of India's top export industries - textiles, engineering products and jewelry - lean heavily on imports. For those that don't, hitches to rapid expansion remain. Retail inflation has mellowed but remains high, at 9.6 percent in July, a burden on purchases inside India. Several exporters set lengthy contracts with clients or use pre-fixed rates that don't allow them to take advantage of the weaker rupee. Others report that international customers are now demanding higher prices, fretful of India's wayward economy. Even India's prized tech sector may see blunter export gains than it could. As the rupee collapsed, stocks in several major Indian information technology companies rose. Within foreign contracts and little costs beyond labor, technology services in theory stand to benefit considerably from a weak rupee. Back in February, before the rupee nosedive began, Nasscom, the high-tech industry body, predicted upwards of 14 percent growth in exports for the fiscal year. But a drop-off in investment into India, coupled with the broader rocky economy, now makes that target unrealistic. "The government situation today doesn't make us very attractive to the investment community," said Sanchit Vir Gogia, C.E.O. of Greyhound Knowledge Group, a technology consultancy. He estimates that export growth for the year may barely topple 10 percent. Mr. Gogia also said that he doesn't expect to see exports rising considerably soon. Global tech giants are setting up operations in cheaper nations, in Southeast Asia and Eastern Europe. Some Indian outsourcers have joined them. The trend is not slowing, particularly as the Indian economy sputters. "There's no confidence in bidding with Indian IT companies," he said. There's too much uncertainty. For many industrialists, a similar culprit of lackluster confidence is behind the export conundrum. "The government is doing everything that it possibly can to restrict export growth," said Mr. Chivukula of Indo-US MIM, a young, United States-born executive. India suffers from a well-known infrastructure deficit: a lack of efficient roads, ports and distribution channels necessary for manufacturing strength. Scores of industrial projects are stuck in bottlenecks nationwide. Easy access to land is a common complaint of manufacturing chieftains. Mr. Chivukula voiced a refrain among business owners that the land acquisition bill, passed recently in the lower house of Parliament, is largely a populist measure that signals the government's inability to tackle its fiscal deficits. The government is very much aware of the nation's tepid exports. In the most recent central government budget, presented in February, Finance Minister P. Chidambaram proposed multiple new tax incentives and investment plans to prop up manufacturing sectors, building on earlier policies set in place. These plans are steadily taking shape, explained Suresh Nair, a regulatory expert at Ernst & Young. But he said that the positive windfalls for exporters may be undone by the damage from inflation. Sanjay Nayak runs Tejas Networks, a telecommunication equipment maker outside Bangalore, and is active in discussions on the electronics industry, where India's imports far outweigh its production. "They're progressing," he said of the policies. But, as usual, very slowly. Mr. Nayak's company, along with Indo-US MIM, is the type of industry economic policy makers in India have pined for - high-skilled manufacturing firms that partner with companies across the globe. At the moment, these Bangalore companies suffer from an infrastructure deficit that doesn't involve potholes and bureaucratic red tape. The business network to fully support them inside India simply doesn't exist. Tejas Networks must import roughly half of its materials and capital equipment since they are not produced in India. Any export gains from a historically low rupee, Mr. Nayak admitted, are a wash. At Indo-US MIM, Mr. Shivashankar points to three of their pricey tooling machines quietly humming inside on the shop floor. They came from Germany, Switzerland and Singapore. We tried some Indian components. It failed miserably," he said. If India were to produce the advanced machinery and metals they need, the story would be different. "Then the devaluation would be like Christmas," lamented Mr. Chivukula. It would just be unbelievable. Mark Bergen is a Bangalore-based freelance journalist.