The Hindu Business Line : Export decline may cost 10 million jobs: FIEO

New Delhi, Jan. 6 The Federation of Indian Export Organisation (FIEO) fears a massive job loss of ten million people out of the 150 million employed in the export segment in the face of shrinking overseas orders and sought immediate fire-fighting measures to save domestic job in manufacturing and export industries.

Addressing a news conference here, the FIEO’s new President, Mr. A. Sakthivel, said that while the first euphoric export growth lasted up to mid-October, afterwards the scenario had turned from bad to worse, “with existing export orders lasting only till end-January, 2009 and no order for the remaining two months of the current fiscal.”

Worst hit sectors

He said there would be approximately 10 million job losses by March 2009 particularly in labour-intensive sectors such as textiles, gems and jewellery, handicrafts and engineering, with each sector ending up job losses of more than a million each. He said even services exports such as tourism, consultancy and software would see job losses of a million before the fiscal year folds up.

Mr Sakthivel said against the export target of $200 billion for the current fiscal, the year would end up between $175-180 billion, while the forecast for 2009-10 would even be $160 billion, given the gloomy world economic outlook.

Orders drying up

Blaming the present global financial crisis for causing in “new challenges to exporters,” Mr Sakthivel said fresh orders were drying up due to tepid demand abroad with buyers even cancelling the earlier orders or rescheduling the shipments and worst of all, demanding cut in prices even for already contracted supply by asking to match “China prices.”

This has compounded their wafer-thin margins, he said, adding that buyers also demand longer period of credit to tide over the present financial crunch even as the financial credibility of the buyers as well as their banks remain under severe strain. Hence the post-shipment credit for Indian exporters available only up to 180 days should be provided at least for a span of 270-365 days, he added

Among the dozen relief measures sought by the exporters, he said foremost was increase in drawback and DEPB(Duty Entitlement Pass Book) rates by 3 per cent and removal of minimum 7 per cent ceiling on export credit and providing 2 per cent additional interest subvention.

Mr Sakthivel also sought an Export Development Fund (EDF) for providing marketing exposure to micro and small and medium exporters as was done by advanced countries.

He said in an export turnover of $162 billion, provision of Rs 100 crore for marketing development assistance (MDA) scheme was “a drop in the ocean” and the EDF they seek should have a corpus of 0.5 per cent of preceding year exports.

Mr Sakthivel said one reason why cotton exports including yarn, fabrics, made-up and garment not being competitive is high minimum support price (MSP) of cotton which was hiked by 40 per cent this season, far above the global prices.

He said such cotton-based exporters should be reimbursed price differential between global and MSP prices to stay competitive as “otherwise cotton textile exports would go out of India”.

Referring to exporters’ exposure in derivatives at the height of rupee appreciation in which even small and medium enterprises had reportedly lost over Rs 2000 crore, Mr. Sakthivel sought settlement of losses in derivatives to exporters which were “missold” to SMEs by the banks and they should be compensated.

More Stories on : Exports & Imports | Human Resources | Outlook

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page