Order books improving but labour shortage still an issue: Exporters

India's exports fell for the fourth straight month in June as shipments of key segments like petroleum and textiles declined but the country's trade turned surplus for the first time in 18 years as imports dropped by a steeper 47.59 per cent.

The country's merchandise exports will further revive in the coming months as order books are showing signs of improvement, even as the industry is still facing labour shortage, according to exporters.

Federation of Indian Export Organisations (FIEO) director general Ajay Sahai said there is no problem of orders in the shorter run, but exporters are still not getting long-term orders.

"We are expecting that the situation will improve further as the order book situation is improving. Orders are mainly coming from the US and European countries," Sahai said.

On labour shortage, he said that factories are still not running at full capacity, but the situation will improve in the next few months.

Council for Leather Exports chairman P R Aqeel Ahmed said the sector is doing well as "our order books are improving".

Sharing similar views, Apparel Export Promotion Council (AEPC) chairman A Sakthivel said there is a positive sentiment for Indian goods and this is helping in pushing the outbound shipments.

"Orders are coming. This year we are hoping that we will be able to significantly increase our exports.

“Factories are running at about 60 per cent capacity. By November, we will be able to reach the pre-Covid level," Sakthivel said.

Ludhiana-based Hand Tools Association president S C Ralhan too said that order books are good with engineering exporters.

"But we are facing problems because of labour shortage. Still only 50 per cent of the workers are coming to factories and due to this, we are not able to ramp up our production," he said.

Ralhan hoped that after the flood water recedes in states like Bihar, labour movement would start.

Export Promotion Council for Handicrafts (EPCH) executive director Rakesh Kumar said that orders are coming, but due to shortage of workers, there is a problem in boosting production.

"Labours are not coming in full shifts," he said.

Kumar also urged the government to address issues related to merchandise export from India scheme (MEIS) as exporters are not able to fix the prices on their products.

"MEIS helps in increasing price competitiveness of exporters, but due to the uncertainty over the scheme, exporters are in confusion over fixing the price of new orders," he added.

India's exports fell for the fourth straight month in June as shipments of key segments like petroleum and textiles declined but the country's trade turned surplus for the first time in 18 years as imports dropped by a steeper 47.59 per cent.

Export sectors which recorded negative growth in June include gems and jewellery (-50 per cent), leather (-40.5 per cent), petroleum products (-31.65 per cent), engineering goods (-7.5 per cent), ready-made garments (RMG) of all textiles (-34.84 per cent), and cashew (-27 per cent).

Import segments which recorded negative growth include gold, silver, transport equipment, coal, fertiliser, machinery and machine tools.

However, exports of oil seeds, coffee, rice, tobacco, spices, pharma, and chemicals reported positive growth in June.

Indian Oilseeds and Produce Export Promotion Council (IOPEPC) chairman Khushwant Jain said that oil seed exports are recording growth on account of healthy output and steps taken by the government to promote shipments.

During April-June 2020, exports fell by 36.71 per cent to $51.32 billion while imports shrank by 52.43 per cent to $60.44 billion.

The trade deficit stood at $9.12 billion during April-June.

Photograph: Reuters