India’s exports in 2019-20 dipped 4.78 per cent to USD 314.31 billion.NEW DELHI: The country’s exports are likely to witness a 10-12 per cent year-on-year decline during the ongoing fiscal, if the current trend persists, due to the contraction in global demand on account of the COVID-19 pandemic, FIEO said on Thursday.
Federation of Indian Export Organisations (FIEO) President S K Saraf said although exporters are receiving a lot of enquiries from countries where anti-China sentiments are high, demand in employment intensive sectors like gems and jewellery, apparels, footwear, handicrafts, and carpets is still a challenge.
“Initially, looking into the lockdown challenges and projected decline in global trade, we expected 20 per cent decline in our exports. However, two days back, the WTO (World Trade Organisation) trade estimates for the second quarter puts the contraction only at 13 per cent,” Saraf told reporters during a video conference briefing.
“…We do not expect much improvement in demand. Therefore, we expect around 10 per cent-12 per cent decline in India’s exports in the current fiscal,” he added.
However, in case of a second wave of the pandemic, the contraction in exports may reach 20 per cent, Saraf said.
India’s exports contracted by a record 60 per cent in April and 36.47 per cent in May.
Saraf also suggested the government to focus on concluding free trade agreements with countries like the European Union, Australia and New Zealand.
“The government should also look at ways to re-start talks on mega trade deal RCEP (Regional Comprehensive Partnership Agreement). It is a good time to involve in RCEP with fully protecting the national interests,” Saraf said.
India had decided not to join RCEP as negotiations failed to address several of the country’s concerns.
To push exports further, he suggested the export community to focus on countries which are providing demand stimulus like the US and the UK, and explore opportunities in countries having anti-China sentiments like the EU, Japan, South Korea, Australia, New Zealand, and Canada.
“We can definitely benefit from anti-China sentiments. We are getting good inquiries from countries like Japan. While an increase in tariff can be one way to achieve import substitution, the more effective strategy would be to provide an ecosystem which addresses the cost disability of Indian manufacturing leading to such imports,” he said.
On India’s import dependence on China, Saraf said it can be reduced with short to long-term plans.
“India has been able to reduce its import dependence in the mobile sector, and the same can be replicated in other sectors of electronics, telecommunication and formulation of specialty in chemicals etc. We need to encourage Indian investments as well as FDI through fiscal incentive in such sectors,” he added.
FIEO has suggested the government to increase incentive rates under the Merchandise Exports from India Scheme (MEIS) till the time Remission of Duties or Taxes on Export Product (RoTDEP) scheme kicks in.
FIEO Director General Ajay Sahai said the export body has asked the commerce ministry to fix RoTDEP rates at four-digit HSN code, wherein only 1,100 items are there as against eight-digit code, under which 14,000 items are there.
In trade parlance, every product is categorised under an HSN code (Harmonised System of Nomenclature). It helps in systematic classification of goods across the globe.
When asked whether India can ban imports from China under the global trade rules, he said the government can do so to protect national interest.
India’s exports in 2019-20 dipped 4.78 per cent to USD 314.31 billion.
Source: indiatimes.com