Exports had shrunk by a record 60.28 per cent in April and 34.5 per cent in March. The nationwide
shut down manufacturing units for 20 days in April, but experts had pointed to the March figures as clear evidence of growing stress in the sector given that units were open till 25 March.
In April, 28 of the 30 major product groups saw the highest-ever double-digit contraction of up to 99 per cent. Even large quantities of petroleum products could not push value-wise exports as international prices were at rock bottom. Policymakers, however, worry that the knock-on effects of April’s historically low exports may cut short outbound trade in FY21 as the March-June period is crucial in the export cycle for many sectors such as apparels and engineering goods.
On Thursday, Goyal asked domestic industry
to scale up investments and seize the opportunity to grow fast once the current crisis ends. He reiterated that domestic consumption will anchor industrial development and exports.
India has a huge opportunity to promote indigenous production in auto component, furniture, air conditioners, and other sectors, he said. The government is already promoting electronics production and the manufacturing of Active Pharmaceutical Ingredients.
Taking note of the fact that services exports did not fall by a wide margin since the beginning of the pandemic, apart from in the hospitality
and tourism sectors, Goyal said he had asked Nasscom
to craft a strategy for $500 billion worth of Information Technology services exports in the next five years. He said consistent efforts were on to diversify the exports basket, and find newer and more accepting markets.
Speaking at the same event, held through video conferencing, Director General of Foreign Trade Amit Yadav said 70 per cent of exports continued to be in raw materials, the trade of which remain susceptible to price shocks and supply volatility. These items also command only 30 per cent of the global product demand. He emphasised the need for state as well as district-level export policies and action plans going forward.
However, the government expects the Covid-19 pandemic to cause major supply chain disruptions that would push the localisation of production of essential commodities, at least for certain commodities, said P Harish, additional secretary at the external affairs ministry.
This was echoed by David Rasquinha, Managing Director, EXIM Bank
of India, who said India can’t be too dependent on any single source for managing supply chains.