The sudden spread of coronavirus in China has worsened the global sentiment, and exporters are delaying their shipments, says industry body FIEO.
According to the Federation of Indian Export Organisations (FIEO), exports declined 1.66 per cent to USD 25.97 billion in January, impacted by global and domestic factors.
"Besides protectionism and liquidity concerns, sudden spread of nCov in the world's second largest economy China has further worsened the global sentiment and exporters are delaying their shipments," FIEO President Sharad Kumar Saraf said in a statement.
Other key factors, including trade war, tension between Iran and the US and slowdown in economies across the globe, have also exaggerated the problem for India's exports sector, he said.
"The spread of nCov has dented China's economy in a big way. Indian exports are also passing through very tough and challenging times," Saraf said.
Along with currency volatility, fluctuations in prices of commodities, including crude, have led to the nominal increase in exports of petroleum, which is a major constituent of India's exports.
According to FIEO, only 10 out of the 30 major product groups were in positive territory during January, including electronic goods, drugs and pharmaceuticals, organic and inorganic chemicals, iron ore, oilseeds, ceramic products and glassware, man-made yarn/fabs/made-ups, cotton yarn/fabs/ made-ups, handloom products have shown some positive or nominal growth.
"However, all other major sectors of exports, including the labour-intensive sectors, are still in negative territory. Also, the marginal decline of 0.75 per cent in imports at USD 41.14 billion during the month has not come as a respite for the economy," Saraf added.
He further said that uncertainty over the Merchandise Exports from India (MEI) scheme has been a major cause of concern.
"Exporters claims, for about six months, are still pending, which has completely wiped out their liquidity and has kept them in doldrums with regard to finalising new contracts," Saraf added.
Also, the problem of risky exporters has further compounded the liquidity problem as their GST and drawback claims have also been held up, he said.
"The stalemate over MEIS for apparels and made-ups should be resolved immediately. Besides, Remission of Duties or Taxes on Export Product (RoDTEP) should be notified with immediate effect for all the products with lead time of at least three months now, so that exporters may factor the same in finalising new orders and making their transition to the new scheme, while continuing with MEIS in the interim period," Saraf added.
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