New Delhi: Top exporters' organization FIEO said rising geopolitical tensions could have an impact on the country's exports in the first quarter of 2024-25 as it is likely to impact global demand.
Global uncertainties arising due to the ongoing war between Russia and Ukraine impacted India's outbound shipments in 2023-24, which declined by 3.1 per cent to USD 437 billion. Imports also declined by more than 8 percent to US$677.2 billion.
FIE Director General Ajay Sahay said, "If the global situation continues to be like this, it will impact global demand. A decline in demand may be seen in the first quarter data.,
He said that despite all the challenges, freight rates are softening and this is indicating that demand may be affected in the coming times.
He warned that further aggravation of the current situation could have a serious impact on world trade.
"Apart from geopolitical uncertainties, high inflation and high interest rates are also important reasons for the slowdown in demand," he said, adding that some advanced economies like Europe could see a further slowdown.
He also said India's domestic currency depreciated by only 1.3 per cent against the Chinese yuan by 4.8 per cent during 2023-24; Thai Baht 6.3 percent and Malaysian Ringgit 7 percent.When asked about the impact of the Israel-Iran war, he said some exporters in the engineering sector have said that demand for goods going to the UAE and then to Iran has reduced.
He said that the demand for jewelery may also decrease.
The Director General suggested the government to take some steps for the exporters on the liquidity front.
Sahay said, “Due to lack of demand, offtake of goods will be less, so it will take a longer period to make payments to foreign buyers as well. So we need funds for a longer period.Exporters also need interest subvention assistance."
He asked to continue the interest equalization scheme.
On December 8, 2023, the Union Cabinet approved an additional allocation of Rs 2,500 crore to continue the scheme till June 30.
The scheme helps exporters from identified sectors and all MSME manufacturing exporters to avail rupee export credit at competitive rates at a time when the global economy is facing adverse conditions. Exporters get subsidy under the Interest Equalization Scheme for rupee export credit before and after shipment."The rates should be increased to 3 per cent and five per cent," he said.
He said technology and knowledge-based sectors like electronics electrical, telecom, machinery, auto, pharma, medicine and diagnostics will help achieve exports of one trillion US dollars by 2030.
“But we have a problem in labour-intensive sectors like apparel, footwear, gems and jewelery as our market share is declining,” he said.''
Global uncertainties arising due to the ongoing war between Russia and Ukraine impacted India's outbound shipments in 2023-24, which declined by 3.1 per cent to USD 437 billion. Imports also declined by more than 8 percent to US$677.2 billion.
FIE Director General Ajay Sahay said, "If the global situation continues to be like this, it will impact global demand. A decline in demand may be seen in the first quarter data.,
He said that despite all the challenges, freight rates are softening and this is indicating that demand may be affected in the coming times.
He warned that further aggravation of the current situation could have a serious impact on world trade.
"Apart from geopolitical uncertainties, high inflation and high interest rates are also important reasons for the slowdown in demand," he said, adding that some advanced economies like Europe could see a further slowdown.
He also said India's domestic currency depreciated by only 1.3 per cent against the Chinese yuan by 4.8 per cent during 2023-24; Thai Baht 6.3 percent and Malaysian Ringgit 7 percent.When asked about the impact of the Israel-Iran war, he said some exporters in the engineering sector have said that demand for goods going to the UAE and then to Iran has reduced.
He said that the demand for jewelery may also decrease.
The Director General suggested the government to take some steps for the exporters on the liquidity front.
Sahay said, “Due to lack of demand, offtake of goods will be less, so it will take a longer period to make payments to foreign buyers as well. So we need funds for a longer period.Exporters also need interest subvention assistance."
He asked to continue the interest equalization scheme.
On December 8, 2023, the Union Cabinet approved an additional allocation of Rs 2,500 crore to continue the scheme till June 30.
The scheme helps exporters from identified sectors and all MSME manufacturing exporters to avail rupee export credit at competitive rates at a time when the global economy is facing adverse conditions. Exporters get subsidy under the Interest Equalization Scheme for rupee export credit before and after shipment."The rates should be increased to 3 per cent and five per cent," he said.
He said technology and knowledge-based sectors like electronics electrical, telecom, machinery, auto, pharma, medicine and diagnostics will help achieve exports of one trillion US dollars by 2030.
“But we have a problem in labour-intensive sectors like apparel, footwear, gems and jewelery as our market share is declining,” he said.''
