Next few months will be very challenging for exports: FIEO President

 Next few months will be very challenging for exports: FIEO President

• Key sectors including engineering, readymade garments, cotton yarn, and plastics and linoleum reported a decline in exports in September compared to the same month last year.

New Delhi: Federation of Indian Export Organizations (FIEO) President A Sakthivel said the coming few months will be quite challenging for exports, unless the geopolitical situation improves "significantly".

The statement comes after India's exports grew at the slowest pace in 19 months at 4.82 per cent in September, with demand slowing in major economies amid a slowdown outlook and high inflation.

Key sectors including engineering, readymade garments, cotton yarn and plastics and linoleum reported a decline in exports in September compared to the same month last year.

“In the current situation, the focus should be on providing liquidity to the export sector at a competitive cost and hence, RBI may consider opening export credit refinance facility to banks to enable them to lend to the export sector with refinance from RBI. to encourage the repo rate,” Sakthivel said.

He said that since interest rates have moved upwards and are now above pre-Covid levels, there is a strong case for restoring interest equalization support to 5% and 3% respectively, as existed before the COVID period. .

He further said that sustained growth in exports of electronic goods and gems and jewelery is a good sign.

Electronics exports grew 72 per cent to $2 billion in September. The export of readymade garments registered a decline of 18.06 per cent during the month.

Engineering goods, which account for a quarter of India's total shipments, declined 10.85% in September at $8.39bn compared to the same month last year.

"Engineering goods exports declined by about 11% in September... mainly reflecting slowdown in some advanced economies and COVID-related restrictions in China ... As a result, Arun Garodia, Chairman, EEPC India said, “Due to the above global factors, the engineering goods sector may remain under pressure in the near term. However, development is expected to resume after that."

“Government should look into the request of the export sector to continue IGST exemption on freight on exports, which had expired on 30th September, especially as freight rates are still at very high levels and thus GST on the goods of the exporters, though the latter are refundable," Sakthivel said.

The World Trade Organization last week projected global trade growth to slow to 1% in 2023 from 3.5% in 2022 amid global uncertainties.

The central government expects India's goods exports to reach $470 billion in 2022-23, up from $422 billion in the previous fiscal.