“Global supply chain constraints call into question the history of India’s export growth”

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Export-Import Bank of India (Exim Bank) is the leading financial institution engaged in the financing, facilitation and promotion of international trade and investment of India. David Sinate, Managing Director, Research and Analysis, India Exim Bank, spoke to The Indian Express about the issues Indian exporters are likely to face this season. Extracts from an interview.

Could global supply chain constraints, especially rising logistics prices and unavailability of containers, be a drag on India’s export growth? If so, which products would be most affected?

The international transport of goods, in particular by sea, remains a major challenge for the growth of exports. As global merchandise trade surpassed pre-pandemic levels, the availability of ships and containers plummeted due to pandemic-related disruptions, creating an imbalance. This has resulted in a dramatic increase in shipping rates. It is a worldwide phenomenon. The shortage of containers is also causing congestion and increased processing time at various Indian ports. In the medium term, the shortage of containers, frequent shutdowns of shipping companies and exorbitant freight rates are expected to jeopardize the increase in exports.

Indian exporters face significant delays in their shipments and resulting cash flow issues as they have to wait longer to receive payment for exported goods. Some low-value export items that are exported in large volumes, by ship or by ship, such as granite tiles, tea, rice and furniture, were the most affected. Notwithstanding the above concerns, India’s export performance over the last three quarters of this fiscal year has been relatively strong. Concerted efforts would be needed to ensure that India retains its global competitiveness and export growth momentum.

Most exporters are wary of the rising cost of logistics. What is your interaction or your studies about? Does your bank have any plans or suggestions to compensate for the same?

The India Exim Bank study “Impact of Covid-19 on India’s International Trade: Strategies and Policy Perspective” highlighted that the shipping industry across the world has been facing inventory and control issues. space as well as reduced available capacity, congestion in ports and increased costs due to the Covid-19 pandemic. Indian exporters fail to secure container reservations and container allocation on time and are unable to deliver goods on time as promised to international buyers, resulting in reduced sales cycles and shortages. losses. A long-term solution would be to increase the capacity of Indian Shipping for Indian trade.

Exim Bank’s study suggests that there is an increased need for automation and digitalization of Indian ports. While India’s ports and shipping lags far behind many developed countries in automation, Covid-19 has underscored the need for swift action on this front. One suggestion in this regard is the use of radio frequency identification (RFID) tags to facilitate the tracking and identification of export shipments as well as the automation of logistics and payment clearance systems.

Exports, especially of agricultural products, have been a savior even during the time of Covid. Are there any special diets to stimulate or increase the same? Which countries do you see as a potential new market for Indian commodities?

Agricultural trade policies in India have objectively focused on increasing agricultural production, aimed at achieving self-sufficiency, reducing dependence on imports and ensuring food security. Several support programs have been designed and implemented by the Indian government. To promote agricultural exports, the government introduced a Comprehensive Agricultural Export Policy (AEP) in 2018, with a vision to “harness the export potential of Indian agriculture, through appropriate policy instruments; make India a world agricultural power and increase farmers’ incomes.

AEP is proposing measures to address the various logistical bottlenecks facing the agricultural sector through the newly formed logistics division. Under the EAF, several unique product-district groups have been identified for export promotion.

The government recently introduced a Production Incentive Program for the Agrifood Industry (PLSFPI) to support the creation of global food manufacturing champions. To further strengthen and support the agricultural sector, several initiatives have been introduced under the Atma Nirbhar Bharat Abhiyan, including the Agricultural Infrastructure Fund (AIF), Pradhan Mantri Matsya Sampada Yojana (PMMSY), the formalization program food microenterprises (MFE).

For agriculture and related products exported from India, the United States was the leading export destination with estimated exports of US $ 4.8 billion in 2020-21 and China was second with estimated exports. to 3.7 billion US dollars. The other top export destinations in 2020-21 were Bangladesh, United Arab Emirates, Vietnam and Saudi Arabia.

Some of India’s traditional markets like Afghanistan and Iran have had line of credit problems. How will this affect our exports?

Afghanistan and Iran are not among India’s top export destinations. lines of credit are generally granted at the request of the Indian government with geopolitical and strategic considerations. There are no operational lines of credit to these countries at this time, and as such we do not expect any impact from this on India’s exports.

Do you think the rise of Omicron could affect exports?

With increased coverage of Covid-19 vaccinations around the world, better health care infrastructure and better preparedness in most countries, and reduced severity of the variant in terms of infection, the rise of ‘Omicron is not expected to have a major impact on exports in the current scenario.


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