As COVID-19 continues to wreak havoc around the world, destroying human lives as well as economies, India’s recent export data show the country’s traders have started to feel the burn. March 2020 exports from India declined by 34.57% to $21.41 billion while for the financial year 2020, exports fell by 4.78% to $314.31 billion. Having said that, Prime Minister Narendra Modi also announced a Rs. 20 lakh crore economic stimulus package to make India ‘atmanirbhar’ (self-reliant). This communication was further backed by Finance Minister Nirmala Sitharaman announcing a series of schemes to revive the economy, of which at least six of them were directed to support local MSMEs. The announcement included revising the definition of MSMEs, and Rs. 20,000 crore in subordinated debt, among other provisions. The move has been welcomed by industry stakeholders across the nation as it is expected to help MSMEs sail through at least the COVID-induced economic crisis. Having said that, even though these measures support the MSME industry as a whole, the government has not announced any export-sector specific strategy. Given the recent data, the export community hopes that in the coming days, the government will take cognizance of its trouble and offer some relief measures catered specifically to them.
Trade Update
16TH MAY
# 69
Out of the 15 relief measures announced by Finance Minister Nirmala Sitharaman on 13th May under the mega Rs. 20 lakh crore stimulus package for the COVID-battered economy, six aimed at bringing lockdown-hit India’s vast MSME sector back to life. MSMEs across sectors and industries have been clamoring for a financial package from the government ever since the lockdown came into force on 25th March. Sitharaman shared the details of the humongous COVID-19 financial package – roughly 10% of the Indian GDP – and announced measures to boost liquidity in MSMEs, help them take benefit of the government schemes, enable them to compete with foreign companies, and strengthen their network.
As part of the third tranche of the ₹20 lakh crore economic package announced by Prime Minister Narendra Modi on Tuesday, Finance Minister Nirmala Sitharaman on Friday announced a slew of measures for agriculture and allied activities. She said the government will amend Essential Commodities Act (ECA), after which cereals, edible oil, oilseeds, pulses, onions and potato will be deregulated.
After broadening the definition of Micro, Small and Medium Enterprises (MSMEs), the government is looking at widening the market for this key industrial sector. According to top sources, the government has already identified a high-potential export market for MSMEs in several countries and will soon come out with a calibrated strategy. The review of future export markets, opportunities and other legal issues linked to the particular countries was carried out just weeks before the mega announcement by Finance Minister Nirmala Sitharaman to support MSMEs while also revising the limit of investment to boost productivity.
India’s exports declined by 34.57% to $21.41 billion in March 2020, according to data released by the government. The slump is largely due to the global COVID-19 pandemic. For the whole year (FY’20), exports fell by 4.78% to $314.31 billion. The data showed that the trade deficit narrowed to $9.76 billion in March 2020 from $11 billion in the same month last year. “The decline in exports has been mainly due to the ongoing global slowdown, which got aggravated due to the current COVID-19 crisis. The latter resulted in large-scale disruptions in supply chains and demand, resulting in cancellation of orders,” the commerce ministry said in statement.
Even as the central government is working out ways to resolve the impasse with the West Bengal government on continuing trade commitments with Bangladesh, a solution to ensure no violation of quarantine norms during COVID times has been worked out. This is part of efforts by India to maintain humanitarian supplies of essential goods to neighboring countries, including medical supplies to Pakistan, Ajay Sahai, CEO and DG of Federation of Indian Exports Organisations (FIEO) tells Outlook.
- Cochin SEZ mops up ₹258 crore amid lockdown via medical products exports
- RBI extends interest subsidy scheme for exporters till March 31, 2021
- MSMEs may now get their grievances resolved within 7 days through this new govt portal
- Non-basmati exports may rebound as India attracts new customers
- Indian steel makers double down on exports as domestic demand disappears