Exporters
say that demand may remain restricted to essentials for some time.
India’s
exports contracted 36.47 per cent (year-on-year) in May 2020 to $19.05 billion
with labour intensive sectors such as leather,
handicrafts, gems & jewellery and jute taking the
hardest hit as manufacturers tried to re-start production amidst numerous
Covid-19 restrictions.
The
country’s trade deficit in May 2020 shrank to a low $3.15 billion compared to
$15.36 billion in May 2019 as imports dropped sharply by 51.05 per cent to
$22.20 billion during the month, according to figures released by the Commerce
& Industry Ministry on Monday.
Gold imports down
Gold
imports dropped by 98.4 per cent to $76.31 million while petroleum imports fell
72 per cent to $3.4 billion, as per the data.
Although
India’s exports performed better in May 2020 than in April when outbound
shipments dropped 60.4 per cent to $10.36 billion mainly due to a nationwide
lockdown, exporters find the situation worrying with some making a case for
additional incentives.
“As
the major economies try hard to re-open, demand would be restricted to only the
most essential items. Even within engineering exports, we need to re-work our
strategy.
“Sub-sectors
like medical devices would be doing well while core infrastructure industries
may take time to recover,” said Ravi Sehgal, Chairman, Engineering
Export Promotion Council of India.
In
fact, the four items which posted a growth in exports in May 2020 are mostly
essentials including pharmaceuticals, rice, spices and iron ore.
‘Need for more incentive’
“The
need of the hour is to immediately provide additional MEIS incentive of 2 per
cent across the board and 4 per cent for labour-intensive
sectors, besides allowing rollover of forward cover without interest and
penalty and automatic enhancement of limit by 25 per cent to address liquidity
challenges,” said Sharad Kumar Saraf,
President, FIEO.
Goods hit
Major
commodity groups which have contracted during May are leather & leather
products, handicrafts, handmade carpet, gems & jewellery,
petroleum products, ready made garments, jute
manufacturing, including floor covering, man-made yarn, meat, dairy &
poultry products (-56.38 per cent), electronic goods and engineering products,
the release stated.
Total
exports for the period April-May 2020-21 were $29.41 billion which was 47.54
per cent lower than exports in the comparable period last fiscal.
Cumulative
imports in the first two months of the on-going fiscal were $39.32 billion
posting a fall of 54.67 per cent year-on-year.
Trade
deficit in April-May 2020-21 was $9.91 billion which was less than a third of
the trade deficit of $30.69 billion in April-May 2019-20.