FIEO Claims July Decline in Export due to Control Inflation, Disruptions in Global Supply Chain and Geo-political Uncertainties

[FIEO Press Release/02.08.2022]

Reacting to monthly Trade Data for July 2022, FIEO President, Dr A Sakthivel said that exports of USD 35.24 billion with just a marginal decline of 0.76 percent, indicates the strong resilience of the exports sector despite measures to control inflation and the continued disruptions of supply chains due to Covid and Russia-Ukraine conflict. Signs of a likely slowdown in exports can been seen as global inventories are pretty high and the merchandise exports is facing the triple whammy: i) there is again a shift in consumption from goods to the services with opening up of economies after Covid-19 pandemic; ii) the inflation affecting all economies reducing the purchasing power and iii) many economies entering the recession while some advanced ones already in recession. The reduction in voyage time, with normalization of Covid disruptions, have also added to the inventory hike as goods which used to reach the West Coast of US in 150 days now reach in 60 days. The export figures have also been affected as the prices of most of the metal and commodities are falling, which has resulted in value-wise export realization. However, merchandise exports during April -July 2022-23 was USD 156.41 billion with an increase of 19.35% over USD 131.06 billion in April -July 2021-22 continue to showcase the strength of the exports sector amidst challenging ongoing geo-political and rising global uncertainties.

FIEO President said that the top sectors, which led the exports growth during the first 4-months of the fiscal were Petroleum Products, Engineering Goods, Gems & Jewellery, Organic & Inorganic Chemicals, Drugs and Pharmaceuticals, Electronic Goods, RMG of all Textiles and Rice. Labour-intensive sectors also contributed to the exports basket, which is a good sign, further helping job creation in the country.

President FIEO said that demand for low price products are on the rise and buyers are moving from China. These two factors are very positive for India. FIEO Chief also reiterated that the benefits of the newly signed FTAs and the PLI Scheme will further help us in building as we continue to move ahead during the fiscal.

Imports growth of about 44 percent during the month is of concern and has been mainly on account of Petroleum Products; Electronic Goods, Coal, Coke and Briquettes; Machinery, electrical & non-electrical; Organic and Inorganic Chemicals and Pearls, precious & Semi-precious stones; Artificial resins, plastic materials, etc.; Vegetable Oil and Non-ferrous metals may be looked into. Crude prices have also added to the import bill of Petroleum Products, thereby to the import basket of the country added Dr Sakthivel.

FIEO President is of the view that though the government has announced a slew of measures to support exports, however, there is a need to support exports through enhancing credit limit under ECLGS by 25%, increasing subvention under Interest Equalisation Scheme, augment container manufacturing, developing an Indian Shipping Line of global repute, increase the validity of RoSCTL and RoDTEP scrips to 24 months and link transferability with realisation, extend RoDTEP to EOUs, SEZ and Advance Authorisation, expand usages of RoDTEP and RoSCTL scrips and logistics support for the sector looking at the higher freight cost.