Exports in the current financial year are likely to decline 10 per cent as global demand dropped due to the Coronavirus pandemic, the Federation of Indian Export Organisations (FIEO) said. The apex organisation said that India must focus on countries including the US and UK among others, which have provided huge stimulus to boost demand. The organisation also noted that India must look at countries which are currently uncomfortable in dealing with China as its potential export destination.
FIEP warned that in case of a second wave, the decline could be 20 per cent.
The apex body added many Indian exporters have received enquiries from countries “where anti-China sentiments are high”. It said that many of these enquiries have been converted into orders.
FIEO also noted that demand in employment intensive sectors like gems and jewellery, apparels, footwear, handicrafts, carpets continue to pose challenges. “We do not expect much improvement in demand. Therefore, we expect around 10 per cent decline in India's exports in the current fiscal,” it said.
Export recovery is likely to be led by sectors such as pharmaceuticals, medical and diagnostic equipment, technical textiles, agriculture and processed foods, plastics, chemicals and electronics, it said.
Seeking support from the government, the FIEO added that the going has become tough especially for exporters after the outbreak of the pandemic as they have lost huge orders due to prolonged lockdown leading to substantial financial losses. Besides, inadequate working capital has also turned into a challenge for exporters.
In a statement, FIEO noted that India has not been able to gain through the free trade agreements (FTAs). “We should focus on FTAs with our major export destinations like the US and European Union (EU).
FIEO also pointed out that the government’s focus on imports substitution should become integral part of the foreign trade policy “as dollar saved is as good as dollar earned and both generate economic activity.”
“While an increase in tariff can be one way to achieve it, the more effective strategy would be to provide an ecosystem which addresses the cost disability of Indian manufacturing leading to such imports,” the statement said, adding that import substitution manufacturing should attract interest subvention on credit, offsetting inland freight disadvantage besides equalization of import tariff from free trade areas..
