Exporters are going through a difficult period even as the government is trying to revive the economy through its Make in India initiative. Orders for Indian goods are down because of a global slump in demand, triggering worries about rising inventories and lower margins.
"There is a fall in order bookings for the coming months, particularly from buyers in West Asia, Africa and Latin America," Ajay Sahai, director-general of the Federation of Indian Export Organisations (Fieo), said.
He warned that exporters could be forced to shut down production lines if the orders continued to fall over the next 4-5 months. Exports contracted 14 per cent to $22 billion in April for the fifth month in a row.
Demand is unlikely to improve in the coming months as large trading partners such as Europe, Japan and China have not seen any robust growth.
Fieo president S.C. Ralhan said, "Normally, the average exporter used to have orders for three to four months, depending on the product. But now it is hardly for one month. It is adding to the constraints of the exporters."
Sahai said the volumes of container traffic at some ports are down by a staggering 26 per cent in the first fortnight of April over the same period in the previous month. If this trend continues for the next few months, it may lead to job losses.
"What is worrying for us now is the volume which is going down. For a few ports, the volumes are down 26 per cent. The decline in volume means value-wise export may suffer more. Exporters may manage for 4-5 months. Thereafter, if the trend continues, job losses will be there," he added.
Exporters are now demanding a slew of incentives such as the re-introduction of the interest subvention scheme, quick refunds and changes in the classification of markets.
They are also lobbying for tax benefits to encourage investment in manufacturing and 100 per cent reimbursement of stall charges at exhibitions.
Liquidity is a big issue for the sector, hit by pending claims of duty drawback and Cenvat refunds. Working capital is constrained as duty refund claims worth Rs 6,423 crore have not been cleared.
"Since two-and-a-half months, the claims are pending and it has reached Rs 6,423 crore. The revenue department appears more concerned about meeting their revenue targets," Ralhan said.
Exporters get refunds for duties paid on the import of input or raw materials used in manufacturing products that are meant for outward shipments.
The new Foreign Trade Policy 2015-2020 has set a goal to double merchandise and services exports to $900 billion. India had missed the export target of $340 billion for 2014-15. Exports stood at $310.5 billion in 2013-14.
Source:telegraphindia.com
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