Euro zone crisis hits UP exporters

The euro zone crisis has hit the exporters in Uttar Pradesh, as the industry was slowly recovering from the slowdown in the US market and the credit squeeze in the domestic financial system.

While, the full impact of the crisis is yet to be ascertained by the industry chambers, exporters and entrepreneurs, it has already been estimated to have adversely impacted revenues between 15-20 per cent across segments.

The depreciation in Euro to around Rs 57 from Rs 68-70 earlier has also led to narrower margins for exporters. Europe accounts for almost 35 per cent of the export destinations for India.

Uttar Pradesh is home to a large number of Micro, Small and Medium Enterprises (MSME) estimated at 1.2 million.

To tide over the crisis and to insulate from similar upheavals in the global markets, the state exporters are exploring other export destinations, especially Africa and Latin American nations.

The major export hubs in UP include, Noida Export Processing Zone (gems & jewellery, apparel, IT), Ghaziabad (chemicals, engineering, textiles, medicines), Meerut (sports goods), Saharanpur (wood carving, toys), Khurja (pottery, bone China), Aligarh (locks), Agra (silk carpets, handicrafts, jewellery, marble inlay, leather), Ferozabad (glassware), Moradabad (brassware), Mathura (stone craft), Kannauj (perfume), Lucknow (chikan), Mainpuri (tobacco), Kanpur (leather, textiles, pharma, spices), Varanasi (silk, zari, handicraft), etc.

Ghaziabad-based industrial goods’ exporter Neeraj Singhal put the exporters’ loss due to the depreciation in Euro and European crisis at almost 20 per cent.

“Since, Euro has depreciated by 15 per cent, the exporters who value their consignments in Euro and receive payments under Letter of Credit (LoC) mode are booking losses to that extent,” he told Business Standard.

Singhal’s firm Karshni Aluminium Company (Kalco) exports aluminium products to European countries, but receives payments on Cash against Documents (CAD) basis as against LoC, which hedged the currency fluctuation by default.

MSME chamber Indian Industries Association (IIA) Noida chapter chairperson N K Kharbanda said the local manufacturing units were working below capacity due to the crisis.

“Due to euro zone crisis, the profit margins have been affected and the orders have slowed in all sectors, including IT, food processing, industrial goods and leather,” he informed.

Meanwhile, the industry is taking steps to look to other markets beyond USA and Europe signed MoUs with industry chambers of Argentina and Brazil for trade promotion.

“We are in touch with the businessmen in Latin American countries, including Mexico, Chile, Paraguay, Uruguay, Argentina and Brazil for trade possibilities in food processing and medicine sectors,” Kharbanda said.

IIA is planning to hold a business event in Noida in December to promote trade ties with Latin America.

“We are encouraging our members to participate in Focus Africa event scheduled for October in Tanzania,” IIA executive director D S Verma informed.

Euro zone troubles has maximum impact on handicraft exports from UP, which accounts for 40 per cent of total handicraft shipments from India. It is 60 per cent, if carpet exports from Bhadohi and Varanasi are included.