Exporters say can hold out for a week

Indian exporters to be affected majorly on the back of the shutdown

With the US government starting a partial shutdown on Tuesday, Indian exporters are apprehending a major setback.

Exporters say besides the fact that the discontinuation of federal services in commercial ports would delay clearances, in the long term, a shutdown might hit economic activity in the US, resulting in a fall in India’s exports.

According to the Engineering Export Promotion Council (EEPC), if the shutdown in the US — one of India’s largest export destinations — continues for more than a week, Indian exporters would start being affected. “While emergency services such as the military will continue, there will be 25 per cent cut in federal staff; there will be a cut in staff at commercial ports and cargo services. So, for exporters like us, cargo clearances will take unduly longer,” said EEPC India Chairman Anupam Shah.

“This also means 8,00,000 federal employees, who are very well paid, would go on leave without payment. If so many people do not get paid, there will, of course, be less economic activity and less consumption. This would lead to a fall in demand; all exporters like us would be affected. We are just hoping it does not continue for too long.”

Shah expressed concern over exports of engineering products to the US, as this segment was already under pressure. “India’s total engineering product exports accounted for $56.7 billion last financial year and the US contributed a chunk of 11 per cent. We are targeting 10 per cent growth, despite a decline of 4.19 per cent between April and August 2013, as we hope it will pick up from this month. But this federal government shutdown is surely a concern,” Shah said.

The Federation of Indian Export Organisations (FIEO) has said there would be no immediate impact on consignments in the pipeline, though it may be a concern in the medium and long terms. “I have enquired with some people and so far, the understanding is customs are exempted from the shutdown. I do not see a problem with export consignments in the pipeline. But, if it continues for a fortnight or so, the entire process will start being delayed and becoming complicated,” said Ajay Sahai, director-general, FIEO.

The US accounts for 13-14 per cent of India’s total exports of about $300 billion. According to data available with the Ministry of Commerce & Industry, in the April-June period this year, exports to the US stood at $9.9 billion, 13.77 per cent of India’s total exports. Primary export items to the US include textiles, gems & jewellery, transport equipment, machinery, readymade garments, etc.

 

The partial shutdown in US government starting today, for the first time in nearly 17 years, was triggerd by the differences between the Republicans and the Democrats over spending and budget,especially, over ‘Obamacare’, the flagship healthcare programme of President Barack Obama.