India’s export sector could lose nearly 15 million jobs as the country locked down to combat the coronavirus pandemic, stated the Federation of Indian Export Organisations (FIEO).
While cautioning the government of a crisis and making the case for financial support., FIEO president Sharad Kumar Saraf said on Friday that a fine balancing is required between life and livelihood, as opting for only one can be dangerous for the country.
Earlier this week, the World Trade Organisation (WTO) said that global trade is likely to plunge by 13 per cent to 31 per cent in 2020, the sharpest slide in a generation and worse than the performance in the global financial crisis year of 2008 due to the coronavirus pandemic.
While the International Labour Organization’s gloomy forecast warned that the pandemic has affected 81 per cent of the world’s workforce, marking the worst phase of joblessness since the Second World War. The ILO further said that lower- and middle-income countries may face a bigger challenge than developed nations, and there was an urgent need to protect jobs and wages of employees.
Saraf suggested that exporters be allowed to begin manufacturing with a minimum workforce even during shutdowns, subject to compliance of adequate social distancing guidelines and other safety norms. He also added that the government must provide interest-free working capital loans to cover the cost of salaries, rental and utilities and exporters must be given a waiver from EPF and ESIC obligations for at least three months beginning March to support labour Intensive sectors that are in extreme pressure to pay wages, but do not have liquidity or cash flow to even pay the EPF and ESIC..
According to sources, the Ministry of Commerce and Industry is learnt to have asked the Ministry of Home Affairs to explore the possibility of allowing export units to function with half the staff, to begin with.
Also, the commerce ministry recently extended the validity of the Foreign Trade Policy (FTP) for 2015-20 by a year to March 2021, to ensure continuity of existing schemes for exporters and importers as they struggle to cope with business disruption due to the coronavirus crisis
The FTP extension means all existing incentive schemes, including the popular Merchandise Exports from India Scheme (MEIS), the Export Promotion Capital Goods (EPCG) scheme, interest equalisation scheme and transport subsidy scheme (for farm exports) will get an extension of one year. A similar decision on extending the Services Exports Promotion Scheme is yet to be made.
The continuation of MEIS, which earns exporters cashable scrips against exports of identified items, and the EPCG scheme, under which capital goods for production of export goods can be imported duty-free, came as a big relief to exporters who are already suffering with their production stopped, consignments stuck at ports and payments delayed.
India’s goods exports dropped 1.5 per cent to $292.91 billion in April-February 2020 compared to the previous year.