Exports fall this fiscal may be limited to 10%: FIEO

Our Bureau New Delhi | Updated on June 25, 2020

Exporters’ body suggests cess on raw material exports to China

Exports may recover in the next few months with a phased lifting of the lockdown and the fall in shipments this fiscal could be limited to 10 per cent compared with the previous year, an estimate by exporters’ body the Federation of Indian Export Organisations (FIEO) shows.

“The fall in exports in June this year is likely to be lower at 10-12 per cent compared with a steep decline in the previous two months, as normalcy is returning to markets such as the EU and Japan. In the second half of the year, there would be a further improvement if there is no more lockdown and we may end the fiscal with an overall fall in exports of 10 per cent,” said S K Saraf, President, FIEO, in a video press conference.

The recovery in exports is likely to be led by pharmaceuticals, medical and diagnostic equipment, technical textiles, agri and processed foods, plastics, chemicals and electronics, he said.

Case for more incentives

The FIEO has made a case for more incentives under the popular Merchandise Export from India Scheme (MEIS) to help exporters bear the losses they had to suffer in the past few months because of cancellation of orders as the world struggled to cope with the pandemic.

While exports of goods from India fell 60 per cent in April 2020, the following month, the decline was 36 per cent.

“We want MEIS rates to be raised for all items other than labour-intensive items, wherein the increase should be 4 per cent,” said Saraf.

On the need to re-strategise India’s trade with China, the FIEO is of the view that restricting imports of Chinese items will not serve any purpose until India has the capacity to produce those items or can import them from other countries at comparable prices.

To discourage export of raw materials to China, the FIEO has suggested to the government that an export cess be imposed on such items.

“About 50-60 per cent of India’s exports to China comprises raw materials. If a cess is imposed on such exports, it will be a source of revenue to our government and the raw material will no longer be cheap,” said Ajay Sahai, Director General, FIEO.

India’s goods exports declined by 4.78 per cent to $314.31 billion in 2019-20.

Published on June 25, 2020

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