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Coronavirus impact: Foreign trade to dip this year

India’s exports estimated to drop by nearly 10% this fiscal year; 20-30% in March alone

Published: 31st March 2020 10:36 AM  |   Last Updated: 31st March 2020 10:36 AM   |  A+A-

Spraying sanitation chemical at Ram koti in Hyderabad on Friday during lockdown till April 14th in view of coronavirus.

For representational purposes (Photo | Vinay Madapur/EPS)

Express News Service

NEW DELHI: Hit by the sudden lockdown and logistics disruption on top of a global slowdown, India’s exports sector is likely to face a nearly 10 per cent dip this financial year and between 20-30 per cent in the crucial month of March.

“If the whole year was a period of challenges, this month has been a disaster with factories shut, orders cancelled by foreign clients and huge logistics disruptions hitting us,” said Sharad Kumar Saraf, president of the Indian Exporters Organisation. “We are staring at orders being cancelled for the rest of the year and many of our companies being replaced by Chinese and Vietnamese suppliers who are working.”

Foreign trade as a percentage of India’s GDP accounted for over 43 per cent of India’s foreign trade with merchandise exports accounting for $331.02 billion last year, out of the total exports of $535 billion. Saraf does not expect merchandise exports to top $300 billion this financial year.

Prof. Biswajit Dhar of JNU, who is also a member of the Board of Trade, agrees. “Both exports and imports are going to take a beating. Transport logistics have been snapped with flights grounded and trucking halted, though that is being restarted now. The pandemic has also broken supply chains and many of our producers are starved of raw materials from abroad.”

Pharma exports, which accounts for $20 billion, have been hit by the snapping of raw material supplies from China, while the jewellery and diamond exporters face an even sharper disruption in supplies from markets abroad. Passenger flights, which have been grounded by most countries, used to carry cargo in their bellies. With just the cargo flights left, the cost of freight from India to US has reportedly shot up from $3-5 per kg earlier to $10-12 now.

“We are asking the government to allow export units to work at least at half the strength. That way, along with regular health-screening, we keep functioning. We will be risking fewer workers to any infections,” Saraf said. Much of what India manufactures for the world, such as textiles, engineering goods and automobiles, can be made by rivals such as China, Vietnam and Bangladesh. This lends anxiety to the long-term future of India’s vital foreign trade sector.

What’s hit

Pharma exports, which account for $20 billion, have been hit by the snapping of raw material supplies from China, while the jewellery and diamond exporters face an even sharper disruption in supplies from markets abroad. Passenger flights, which have been grounded by most countries, used to carry cargo in their bellies. With just the cargo flights left, the cost of freight from India to US has reportedly shot up from $3-5 per kg earlier to $10-12 now.



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