Not running smoothly
In the crucial engineering goods sector, which accounts for one-fourth of India's $314 billion exports in 2019-20, a lack of labour has crippled the bicycle, fasteners and hand tools industries in Punjab while Gujarat based castings units have suffered from lack of raw materials, according to Ravi Sehgal, chairman of Engineering Export Promotion Council.
"As we had feared, major chunks of our foreign market share in key export destinations like the United States and Europe are under pressure from competing nations. On the face of it, Mexico and Brazil are gaining on Indian exports
in North America while products from Turkey and Egypt are creating pressure in European markets. But the real threat remains from Chinese suppliers who have now resumed production and are undercutting prices," Sehgal stressed.
The sector had been badly hit by order cancellations but with European nations again opening up, a sudden demand in equipments for water, gas and power distribution is expected which may allow for some recovery of lost ground. The industry has informed the Commerce and Industry Ministry that it wants units to start soon as most of the April-October peak season has already been lost.
Hanging by a thread
With an even shorter business season, apparel and textile exports are witnessing significant turbulence. With major retailers like J Crew, Neimann Marcus and Aldo filing for bankruptcy in the United States, vast shipments ordered by a clutch of related brands for the ongoing Spring-Summer Season 2020 have languished in shut warehouses.
"While the industry has now turned to pushing out more raw materials to Vietnam and Thailand. But on one hand, freighters have kept up charging extremely high costs of shipping. On the other, complete breakdown in movement across the overland crossing to Bangladesh has left more than 1000 tonnes of cargo stranded," said Siddhartha Rajagopal, Executive Director, at Cotton Textiles Export Promotion Council. Securing certificate of origin and digital signatures for documents have also become difficult, he added.
Elsewhere, the Commerce Department has continued receiving pleas. The Apparel Export Promotion Council has requested the Department to push the issues of extension of packing credit and forward contract by 6 months without penal interest and waiver of penalty imposed on forward covers by some banks, with the Finance Ministry. Meanwhile, the Confederation of Indian Textiles Industry has suggested all raw materials, dyes and chemicals, intermediaries, spares, and accessories be exempted from anti-dumping duty and basic customs duty to reduce costs.
Hoping to secure a breather in April, pharmaceutical exports have come up against a string of restrictions on export of active pharmaceutical ingredient (API) even as the sector recovered from the lack of bulk drugs, imported from China. While in April, Europe sought about 1,000 tonne of the active pharmaceutical ingredient (API) for paracetamol -- used commonly to treat body pain and fever -- from India, the shipment of these were held up by slow movement at ports.
The gap in production due to the absence of bulk drugs also shook the sector. "Having seen the the good pace of export trend in first three quarters and price stabilisation in the United States, it was estimated that FY2020 exports would reach $22 billion," said Pharmexcil Director General Uday Bhaskar.
Exporter's bodies have now asked the government to let industrial units reopen fully even in the high-risk red zones, stating that losses are rising rapidly. "We understand it may be difficult to keep business running, since the red zones are where the corporate offices, server systems and distribution points are based," said a senior government official.