US President-elect Joe Biden’s proposed $1.9 trillion stimulus package to tackle the impact of Covid 19 crisis is not only good news for the American economy but the world over including India and its export sector.
A revival in the US economy is expected to translate into larger export orders for India and other countries. The US is India’s largest trading partner.
“When so much money flows into an economy, it is obvious that there will be a huge boost in demand and that definitely benefits India and several other countries,” Deepak Sood, Assocham secretary general told IndiaNarrative.com. However, he also said that for India to become a global export hub, structural changes and reforms would be key to bring in competitiveness. “It is critical for India to look at ways which will make the export sector competitive, “ Sood said.
Carving out of the proposed stimulus package couldn’t have come at a more appropriate time especially at a time when several countries in Europe have gone into lockdowns and curfews as the second wave of Coronavirus hit the continent. While there has been no cancellation yet of any export orders placed with Indian business houses, anxiety among the Indian exporters is rising. Many European importers have already urged deferment of pre-booked consignments.
The lockdown could also impact subsequent orders particularly of lifestyle goods.
“We do not anticipate any major problem though there have been requests from European buyers to defer supplies. No order has been cancelled and we hope that by the middle of next month or by the end of February, things will normalise as Covid-19 vaccination drive is already underway in most countries,” Ajay Sahai, director general and CEO, Federation of Indian Export Organisations (FIEO), told IndiaNarrative.com.
Sahai noted that several Indian exporters are already reeling under liquidity pressure with delayed refunds and payments under the Merchandise Exports from India Scheme (MEIS) Scheme—aimed at providing incentives to exporters to offset infrastructural inefficiencies and associated costs.
Sources said that the existing trade war between the US and China could further help countries such as India, Vietnam and Taiwan.
India is also aggressively looking at inking trade agreements with European Union, UK and the US to boost its share of exports in the global market.
Meanwhile, the government is expected to put in place the new foreign trade policy by April 1. The new policy is expected to lay the roadmap for achieving the $5 trillion economy amid a Covid-19 ravaged world by focusing on boosting the manufacturing sector at a time when many foreign companies are looking to set up shop in the country.
According to official data, India’s share in global merchandise exports was 1.7 per cent in 2018. The focus in the new policy will be to take it to double digits.
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