Global demand boost for Indian exporters

Economy


Higher global demand, especially for engineering goods, chemicals and low-value lifestyle products such as carpets, has made Indian exporters’ order books improve by almost 40% compared to the pre-Covid-19 period, with handicrafts, ceramic products and cotton yarn/fabrics showing signs of further strengthening amid a drop in new cases in the United States and despite another wave of infections in the European Union.

“Our exporters’ order books have improved by almost 40% compared to the pre-Covid-19 period,” said Ajay Sahai, director-general, Federation of Indian Export Organisations (FIEO).

Attributing the increase to global demand for plastics, chemicals, engineering goods and low-value lifestyle products such as machine made carpets and non-leather footwear, Sahai said labour-intensive sectors such as handicrafts, ceramic products and cotton yarn/fabrics too are showing signs of further strengthening.

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“There is a gradual recovery in global trade which will have a positive impact on the export sector in India,” said Engineering Exports Promotion Council of India chairman Mahesh Desai. Demand for Indian engineering items from China, Singapore, Germany and Thailand has seen high double-digit growth, led by exports of iron and steel, and non-ferrous metals like copper, besides auto components, he said.

The handicraft sector expects an export growth of about 30% in the ongoing quarter and outbound shipments could end up reaching the same level as in 2019-20, according to the Export Promotion Council for Handicrafts (EPCH).

“The order book is agreeable but there is a 25-27% rise in prices of raw materials such as wood and metals, and labour costs,” said EPCH executive director Rakesh Kumar. Business in the ongoing quarter may reach the same level as the corresponding quarter of 2019, led by furniture, home and lifestyle products while fashion jewellery segment has yet to see a pickup, he said.

Kumar said no new products could be launched in 2020. “The orders are 70% of what used to be in the pre-pandemic times,” said Rafeeque Ahmed, chairman of Chennai-based Farida Group, one of India’s largest shoe manufacturers and exporters, which is a vendor to overseas firms such as Adidas, Clarks, Marks & Spencer, Debenhams and Bally Shoes.

Ahmed said though there is demand from the US because of flattening of Covid-19 cases, the average order size has declined to 40-60,000 pairs of shoes in a season from 50-70,000 pairs earlier.

Leather exports from India shrank 32.16% year-on-year in the April 2020-February 2021 period while handicrafts contracted 8.49%.

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Unlike the pre-Covid era, when orders would come months in advance, orders now come in at a short period of time and need to be fulfilled faster, making it difficult to plan the business, said exporters. Moreover, buyers are ordering minimum quantities of goods to avoid getting stuck with inventory, they said.

India’s exports between April 2020 and February 2021 amounted to $256.18 billion, down 12.23% year-on-year.

FIEO expects India’s exports to touch $285-290 billion in 2020-21, lower than $314.3 billion in the previous fiscal.

“The UK, EU and China are disturbed because of the pandemic and the order book has been impacted because of that. We expect our exports to decline 20-25% by the end of March,” said Siddh Nath Singh, chairman, Carpet Export Promotion Council.

Carpet exports rose 3.16% year-on-year in the first eleven months of this fiscal. As per FIEO, rising exports from China has led to the shortage of containers in the region as most of the empty containers are available only for exports from China.

That’s because the shipping lines and container companies are being paid hefty premiums for bringing empty containers back to China, it said.



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