India / Indian export body warns sector may face 1.5 cr job losses

The Financial Express : Apr 12, 2020, 04:20 PM
New Delhi: The Federation of Indian Export Organisations (FIEO) has warned of 15 million job losses due to the coronavirus pandemic if the government doesn’t step in swiftly with a relief package for the export sector.

Highlighting the WTO’s gloomy forecast for 2020 global trade and the ILO’s warning that the Indian economy is at the risk of falling deeper into poverty due to the pandemic, FIEO president Sharad Kumar Saraf said on Friday that a fine ‘balancing is required between life and livelihood, as opting for the one can be disastrous for the country’.

He suggested that exporters be allowed to start manufacturing with a minimum work force even in times of lockdown, subject to compliance of adequate safety norms. The government must extend interest-free working capital loans to cover the cost of wages, rental and utilities and they must be given a waiver from EPF and ESIC obligations for at least three months starting March.

Saraf said exporters are left with very less orders and if factories are not allowed to work with a minimum workforce for timely execution, many of them will be on the brink of collapse, as they are saddled with fixed cost. Huge amount of loans, too, will turn bad, pressuring the balance sheet of banks as well.

He also recommended an extension of the pre-and-post-shipment credit by 90-180 days on their maturity, rollover of forward cover without interest and penalty, automatic enhancement of limit by 25% to address liquidity challenges and extension of interest equalisation benefits.

The WTO has already warned that global trade is likely to plunge in the 13-32% range in 2020, the sharpest slide in a generation and worse than the performance in the global financial crisis year of 2008. In such a situation, India, too, will be hit hard.

For its part, the commerce ministry is learnt to have asked the home ministry to consider allowing export units to function with half the staff, to start with.

Also, the ministry recently extended the validity of the Foreign Trade Policy (FTP) for 2015-20 by a year to March 2021 and relaxed certain other norms. The FTP extension will enable exporters to continue to get incentives under existing programmes — including the Merchandise Exports From India Scheme (MEIS), interest equalisation scheme and transport subsidy scheme (for farm exports) — without disruption for one more year. However, a decision on extending the Services Exports Promotion Scheme is yet to be made.