Exports Back in Positive Territory is on Expected Line, Dr A Sakthivel, President, FIEO

[FIEO Press Release/16 December 2022]

Responding to November, 2022 Trade Data, FIEO President, Dr A Sakthivel said that exports coming back in the positive territory is on expected line though the challenges continue due to slowdown in demand and rising inflation in most economies. Marginal increase in merchandise exports is a reflection of the toughening global trade conditions on account of high inventories, 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. Further going forward, we should also look at the upcoming Fed rate hike as that also may add pressure on the flight of capital with the Bank of England also going for a recent rate hike. Growth in only 15 out of 30 major product groups is of concern and therefore President, FIEO is of the view that the coming months would be quite challenging unless both global economic growth and geopolitical situation improves drastically. 

However, the minor increase in imports is due to the jump in import of petroleum, crude & products, fertiliser and coking coal etc. 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. Government may also extend the ECLGS for one more year till 31.3.2023 suitably enhancing the moratorium period. 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. Besides these, the tenure of PCFC may be enhanced from 180 days to 365 days looking into the supply side and logistics challenges. While welcoming the extension of RoDTEP rates for Chemicals, Pharma and Articles of Iron & Steel, Dr Sakthivel requested that the rates may be notified for the holders of Advance Authorization, DFIA and EOU units as well.

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. The upcoming Budget should allocate funds for exports development with a corpus of Rs 5000 Crore for aggressive overseas marketing by MSME to showcase Indian products globally.