Exports may be slow down in FY23 due to Covid, supply issues: Trade group

Rise in input cost, delays in shipments and payments among problems in growth, says FIEO.

India’s outbound shipments growth may slow down in 2022-23 compared to the previous fiscal year due to new variants of Covid-19 and supply side challenges, Federation of Indian Export Organizations (FIEO) said on Thursday.

Exports clocking 15-20 percent growth or more in the next fiscal will depend on whether the pandemic is contained through massive vaccination across the globe and creation of required capacity, the exporters’ body said in a statement.

“Looking into the emergence of the new variants and supply side challenges at this point of time, we would like to be a little conservative and will aim for an export of $460-475 billion during the next fiscal,” said FIEO president A Sakthivel.

India exported goods worth $290.63 billion during the financial year 2020-21. It aims to achieve a target of $400 billion in the current fiscal year, which is expected to translate into a growth of nearly 38 per cent YoY. While in absolute terms, the target of $400 billion is likely to be achieved by the end of the fiscal year, the growth may not be as sharp due to a high base.

“Thus, export growth of 30-35 per cent on such numbers ($400 billion) would be difficult, particularly as additional exports may require augmenting the capacity as well. Moreover, the spectacular increase in global trade by about 22 per cent, buoyed by high prices of commodities, as witnessed in 2021 will not be there to provide the tail wind to our exports,” Sakthivel said.

There has been a sustained increase in exports since the beginning of the current fiscal, amid robust external demand due to opening up of various economies. As of now, India has met nearly two-thirds of its annual export target.

“The good thing with our exports has been a very balanced growth across sectors both in traditional exports as well as sunrise sectors of exports during the current fiscal. We are hopeful that the same trend will continue particularly as the order booking position of all exporters are extremely encouraging and China plus one policy of global companies is definitely helping our exports,” Sakthivel said.

During April-October, when the overall exports grew by about 59 per cent, almost all regions witnessed a growth rate of at least 60 per cent, barring Association of Southeast Asian  Nations (ASEAN), North East Asia and Commonwealth of Indian States (CIS) countries.

Therefore, in the next year as well, FIEO believes that export growth will be widespread and exports to NAFTA, Europe, Middle-East, Oceania will continue to boom.  India should ink trade agreements with the UK and UAE soon and finalize trade pacts with Canada and Australia next year, he said.

Lack of capacity is one of the major concerns to meet the increasing demand. Rise in input cost and delays in shipments and payments have resulted in the need for additional credit. While container shortage has eased due to peak season supplies for Christmas, New Year and Chinese New Year getting over, the same is likely to compound once countries open up after the holiday seasons particularly if the new Covid-19 variant is not brought under control, said the exporters association.