FIEO Sees Bleak Export Outlook in Coming Year

[FIEO Press Release FIEO/PUB/PR/43/2021-22 dated December 23, 2021]

The fiscal year 2021-22 is expected to end with merchandise exports of US$ 400 Bn. As this would be on a high base for FY’ 2022-23 unlike last year, said FIEO President, Dr A Sakthivel. Thus, export growth of 30-35% on such numbers would be difficult particularly as additional exports may require augmenting the capacity as well. Moreover, the spectacular increase in global trade by about 22%, buoyed by high prices of commodities, as witnessed in 2021 will not be there to provide the tail wind to our exports. However, at the same time, since our share in global trade is still less than 2%, we still have a long way to go. Much will depend on whether we would be able to contain Covid-19 through massive vaccination across the globe and be able to create required capacity, which will decide whether we should look for 15-20% growth or even more for the next financial year, added Dr Sakthivel. FIEO Chief reiterated that looking into the emergence of the new variants and supply side challenges at this point of time, we would like to be a little conservative and will aim for an export of US$ 460-475 Bn during the next fiscal.

FIEO President further added that we expect the global consumption to go up substantially in 2022, albeit the pandemic is controlled. The good thing with our exports has been a very balanced growth across sectors both in traditional exports as well as sunrise sectors of exports during the current fiscal. We are hopeful that the same trend will continue particularly as the order booking position of all exporters are extremely encouraging and China plus one policy of global companies is definitely helping our exports. A trend of India’s exports during the current year shows that in the first 7 months of the current fiscal, when the overall exports grew by about 59%, almost all regions showed a growth rate of about 60% or more except for ASEAN, North East Asia and CIS countries. Therefore, in the next year as well, we feel that exports growth will be widespread and exports to NAFTA, Europe, Middle-East, Oceania will continue to boom particularly as we should look at concluding Free Trade Agreements with UK & UAE soon and CEPA & CECA with Canada & Australia respectively in 2022, said Dr Sakthivel.

FIEO Chief also reiterated that while the demand side of exports should be taken care of by the industry, Industry and Government should work together to address the supply side challenges. Lack of capacity is one of the major concerns to meet the increasing demand. Moreover, with increase in the prices of inputs, skyrocketing freight and delays in shipments and payments have resulted in the need for additional credit. While container shortage has eased due to peak season supplies for Christmas, New Year and Chinese New Year getting over, the same is likely to compound once countries open up after the holiday seasons particularly if the new variant is not brought under control. Government may consider giving a push to container manufacturing in the country particularly as we require a large number of containers for inland coastal shipping. It is also encouraging to note that the Government is pushing FTAs and CECA/CEPA to provide competitive market access to exporters and we look forward to a regional economic alliance with EU, GCC (UAE, Bahrain, Saudi Arabia, Oman, Qatar and Kuwait), SACU (South Africa, Namibia, Botswana, Lesotho and Eswatini) and other economic regions.