Slowdown in merchandise exports is reflection of toughening global trade conditions facing demand slowdown on account of high inventories, rising inflation, economies entering recession, high volatility in currencies and geopolitical tensions: FIEO President

Responding to October, 2022 Trade Data, FIEO President, Dr A Sakthivel said that the slowdown in merchandise exports is a reflection of the toughening global trade conditions facing demand slowdown on account of high inventories, rising inflation, economies entering recession, high volatility in currencies and geopolitical tensions. The drop in commodity prices and restriction on some exports, with a view to stem the price increase in the domestic market, have also affected the growth numbers. He said that the decline in exports of major labour-intensive sectors including engineering goods, apparels and textiles, gems & jewellery, petroleum product, organic & inorganic chemicals, drugs & pharmaceuticals, marine products, leather & leather products besides many agri product sectors is of particular concern as these sectors are key to huge employment generation. At the same time, the growth in exports of electronic goods on a sustained basis is a good sign besides growth in exports of few agri product sectors including oil seeds, oil meals, tobacco, tea and rice. While we should not draw solace from the fact that exports of most of the economies are facing contraction but this is a stark reality. President, FIEO said that the coming months would be quite challenging unless both global economic growth and geopolitical situation improves drastically.
 
However, the decline in imports is encouraging despite the jump in import of petroleum, crude & products, fertiliser, crude & manufactured and transport equipment. We hope that the energy prices will come down further to provide more relief to us on the trade deficit, opined FIEO Chief.
 
Dr Sakthivel added that in the current situation, the focus should be on providing liquidity at competitive cost to the export sector and therefore, RBI may consider opening export credit refinance facility to banks so as to encourage them to lend to the export sector with refinancing from RBI at the Repo Rate. Since the interest rates have moved upward and are now more than the pre-covid level, there is a strong case to restore the Interest Equalization support to 5% and 3% respectively as existed prior to the covid period. Moreover, the Government should look into the request of the export sector for continuing with IGST exemption on freight on exports, which lapsed on 30th September, 2022, particularly as the freight rates are still at much elevated level and GST on such freight will affect the liquidity of the exporters, though refundable later. Further, the Federation is also of the view that the new TMA scheme for agri exporters may be announced as the cost of freight, particularly the reefer, is very high. Besides, time-bound clearance to all SCOMET related shipments and encouragement to investment in export marketing through tax deductions is also the need of the hour.