Article 370: Gujarat chemical exporters face uncertainty over Rs 150 cr payments

Published: August 23, 2019 2:37:14 AM

The exporters are also in uncertainty over the fate of orders already placed by Pakistani buyers. The value of goods to be dispatched to the neighbouring country during the current fiscal would be around Rs 2,000 crore, says an exporter requesting anonymity.

Article 370, Gujarat, chemical exporter, export, import, chemical industry Generally credit cycle for the exported chemicals is four months but in some cases (based on business relations), it stretches for a couple of months extra.

By Nayan Dave

Gujarat-based exporters of chemicals and dyestuffs intermediates are facing uncertainty over payments worth around Rs 150 crore towards their exported goods following abrogation of Articles 370 and 35A. This is on account of Pakistan’s ban on trade with India in response to the move. Every month, chemicals worth around Rs 25 to 30 crore are being exported to the neighbouring country. Generally credit cycle for the exported chemicals is four months but in some cases (based on business relations), it stretches for a couple of months extra.

“Nearly 80 to 100 Gujarat chemicals units are facing uncertainty over their payments. The cumulative value of their exports would be somewhere around Rs 150 crore over the period of past four to six months. As Pakistan imposed a ban on trade with India, the banks and importers of Pakistan have stopped releasing payments with immediate effect,” says Shailesh Patwari, former president of Gujarat Chamber of Commerce and Industry (GCCI) and chairman of Naroda Envrio Projects.

Most of these units are now facing crunch for working capital as suddenly their money cycle stopped, he says adding, “We have represented case of Gujartat’s chemical exporters to Union finance minister Nirmala Sitharaman during her recent visit to Ahmedabad. She gave us assurance to take up the issue on priority basis.”

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The exporters are also in uncertainty over the fate of orders already placed by Pakistani buyers. The value of goods to be dispatched to the neighbouring country during the current fiscal would be around Rs 2,000 crore, says an exporter requesting anonymity. According to him, most of the exporters are sharing good business relations with Pakistani importers, but due to current tense situation, they wouldn’t take delivery of the goods which Gujarat units have either manufactured or accepted the orders from across the border.

“India exports approximately Rs 50,000 crore worth of chemicals and dyestuff across the globe during the year 2018-19. Pakistan’s share is over Rs 3,600 crore. Of these, 80% exporters are based in Gujarat,” says Yogesh Parikh, president of Gujarat Dyestuff Manufacturers Association (GDMA).

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