COVID-19 pandemic to hit MSME exporters more: Trade experts

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April 9, 2020 4:01 PM

The sector also contributes about 25 per cent to the country's GDP (Gross Domestic Product) from service activities and over 33 per cent to the manufacturing output of India.

The sector also contributes about 25 per cent to the country’s GDP.

Micro, small and medium enterprises (MSME) exporters will be impacted more by the current lockdown on account of COVID-19 pandemic as the sector accounts for over 45 per cent of the country’s total outbound shipments, according to trade experts. They said the magnitude of the impact on MSME exporters can be gauged from the statement of the World Trade Organisation (WTO) which has projected that global trade in goods is set to decline steeply between 13 per cent and 32 per cent in 2020 as countries across the world are battling the pandemic.

The sector also contributes about 25 per cent to the country’s GDP (Gross Domestic Product) from service activities and over 33 per cent to the manufacturing output of India. Biswajit Dhar, a professor of economics at Jawaharlal Nehru University, said the government should immediately come out with an incentive package for exporters as the current crisis will ‘severely’ hit the MSME sector.

“India will suffer very badly and the biggest impact will be on the MSME exporters. They will also face issues in calling back their workers as several of them have migrated to their villages and towns,” he said. He said several countries, including the US, Japan and Germany, have announced incentive packages, but India is yet to roll out support measures for exporters.

“Incentives will help exporters to resume the work immediately after things start getting normal, otherwise they will not be able to restore their global buyers,” Dhar added. Rakesh Mohan Joshi, professor at Indian Institute of Foreign Trade (IIFT), said the outbreak of COVID-19 has put economies across the world on a virtual standstill.

“India’s major export items such as petrochemicals, gems and jewellery, automobiles and auto components, cotton yarns and textiles, apparels, marine products, bovine meat among others are likely to receive a jolt primarily due to slump in demand in its major markets and disruption of supply chains which are integrated across countries,” he said.

When asked about numbers, he said estimating any drop seems unrealistic as it would largely depend upon the virus rather than government incentives “as to how long — a quarter, six months, a year or still longer — it takes to emerge out of the virus and the damage it inflicts on human health and lives”. However, he added that the pandemic has opened up enormous opportunities in sectors such as pharmaceuticals wherein India had been the largest supplier of generic medicines which are highly competitive in European and American markets.

Besides, Joshi said the coronavirus, that emanated from China, has transformed the outlook of multinationals manufacturing in China and they are actively scouting for alternative destinations for investment to either shift their manufacturing or make new investments.

“This is the time India should transform this calamity into an unprecedented opportunity to make India the manufacturing hub and realize its ‘Make in India’ objective in real sense,” he added. Assistant professor and expert on agriculture economics Chirala Shankar Rao said there is a need to give special focus to MSME exporters engaged in agri products as there is a surge in demand for food products in global markets due to coronavirus outbreak.

Sharing similar views, Trade Promotion Council of India (TPCI) Chairman Mohit Singla said more than 100 per cent spike has been registered in demand for essential commodities such as rice, wheat and pulses during the current crisis. Global trade growth is expected to plummet by up to a third in 2020 due to the coronavirus pandemic, the WTO said on Wednesday while warning that the numbers would be ‘ugly’. “World trade is expected to fall by between 13 per cent and 32 per cent in 2020 as the COVID-19 pandemic disrupts normal economic activity and life around the world,” the WTO said in a statement.

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