India’s Exports Likely to Dip by 10-12 Per Cent in 2020-21: FIEO

Last Updated at: Feb 25, 2021
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In the fiscal year 2020-21, India’s exports are expected to drop by 10-12 per cent according to the FIEO (Federation of Indian Export Organisations). While it looks alarming at first glance, we need to look a little deeper to understand how bad it is and what exactly is the implication of it.

Exports play a major role in a country’s economy. If the exports go down in a country, the real GDP declines as the demand for the products reduces. This could have an impact on a country’s economic growth, employment, and even exchange rates.

Why Is There a Decline in Exports?

This decline in exports is due to COVID-19 pandemic. Not just India, but almost all countries’ exports took a hit due to the pandemic as borders were closed to avoid the spread of the virus. While there has been an improvement compared to the initial months of lockdown (Feb-April), at this rate it would still be months before it gets back on track.  

How Bad Is It?

FIEO President S K Saraf stated that as they looked into the expected decline in global trade and the challenges of lockdown, they had anticipated a 20 per cent decline in India’s exports. However, WTO’s second-quarter trade estimates have indicated only 13 per cent. This is better than what was expected.

In the initial months of the pandemic, India’s exports declined by a record 60 per cent in April. In May it was at 36.47 per cent. Considering what was expected in the second quarter, the overall trend is good. However, the exports could take a hit again if there is another wave of the pandemic as predicted, in which case it might attain 20 per cent.

That said, we are still better off than many countries that depend heavily on exports like Ireland, Singapore and Vietnam.

Can We Expect It to Get Better?

As we saw above, if the trend we have had for the past quarter persists, we can expect exports to increase, provided there is no second wave of the pandemic.

According to the FIEO president, our exporters are getting a lot of inquiries due to the increase in anti-China sentiments across the world.

However, it is still going to be difficult to recuperate in the employment-intensive sectors like footwear, handicrafts, apparels, gems, and jewellery, etc.

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What Are the Suggestions of FIEO?

FIEO has suggested that we could explore countries that harbour strong anti-China beliefs like Japan, the EU, Australia, New Zealand, South Korea, and Canada. We have a chance to increase our trade with them. The export community will advise focusing on countries like the UK and the US, which are acquiring a need stimulus.

Also, the FIEO recommended the government to concentrate on concluding the free trade agreements with countries like the European Union, New Zealand, and Australia.

Previously, India decides not to join RCEP (Regional Comprehensive Partnership Agreement) as several of our concerns were not addressed in the negotiation. However, according to FIEO officials, this might be the time to re-start the talks on this mega exchange deal. This time we could involve in RCEP and also fully protect the national interests.

In addition, FIEO has suggested that till the Remission of Duties or Taxes on Export Product (RoTDEP) Scheme comes into place, the government should raise the incentive rates under Merchandise Exports.

What is the FIEO?

FIEO was set up in 1965 jointly by the Government of India, Ministry of Commerce and private trade and industry. It is the apex body of Indian export promotion organisations and acts as a partner of the Government of India in promoting India’s exports. FIEO represents the spirit of enterprise of the Indian entrepreneurs in the global market.

Who Can Be a Member of FIEO?

Entities that involve in the export business can become FIEO members. The membership will regulate by the Memorandum of Articles and Association of FIEO and the Foreign Trade Policy. It will allow exporters to enjoy the benefits of Foreign Trade Policy. And FIEO services like credentials, facilities and global reach. The following are different categories of membership subscription:

  • Individual Exporter
  • Multi-Products Group
  • Multi-Product Group (Premier)
  • Service Providers
  • FTZ units/EOUs
  • One Star Export House
  • Two Star Export House
  • Three Star Export House
  • Four Star Export House
  • Five Star Export House
  • State Export Organization

The membership subscription fee varies for different categories.

How to Register with FIEO

If you fall under one of the above-mentioned categories you can register with FIEO and enjoy the benefits. This requires an exporter to obtain a Registration-cum-Membership Certificate (RCMC). The application form for FEIO registration can be found on its website. One has to submit the duly filled form along with the following documents:

  • Importer and Exporter Code (IEC) number ─ self-attested copy.
  • Applicant’s Bank Statement.
  • In the case of a manufacturing business, SSI/IEM certificate.
  • Declaration concerning the export and import affected during the precedent FY.
  • In the case of companies, MoA and AoA.
  • In case of a partnership, partnership deeds.