Impact of Lockdown on India’s Export: Analysis and Government Initiatives

Discover the impact of the lockdown on India’s export industry and the efforts made by the Ministry of Commerce & Industry to revive the economy. This article analyzes the decline in overall exports during the lockdown period and provides insights into the recovery seen in recent months. Additionally, it highlights the key initiatives taken by the government to boost exports and support various sectors. Read on to learn more about the Ministry of Commerce & Industry’s role in addressing the challenges faced by the export industry.

India’s overall export (merchandise plus services) experienced a significant decline of 25.42% during the April-June 2020 period compared to the previous year. However, there has been a recovery in merchandise exports, with the decline reducing to (-)12.66% in August 2020. As the nation-wide lockdown eased and the economy gradually reopened, industrial activity started to normalize. The Ministry of Statistics and Programme Implementation’s quick estimate of the Index of Industrial Production (IIP) for June 2020 stood at 107.8, showing improvement compared to the figures of 53.6 and 89.5 in April and May 2020, respectively.

To address the challenges faced by the export industry, the government has implemented several key steps. These initiatives aim to boost exports, support various sectors, and create an enabling environment for businesses. Some of the notable measures taken include:

1. Extension of Foreign Trade Policy (2015-20) validity: The government extended the validity of the Foreign Trade Policy by one year until 31-3-2021. This extension allows businesses to benefit from relaxations and time extensions due to the COVID-19 pandemic.
2. Extension of Interest Equalization Scheme: The Interest Equalization Scheme, which applies to pre and post shipment rupee export credit, has been extended by one year until 31-3-2021. This move provides exporters with continued support to navigate challenges and promote export activities.
3. Sectoral incentive packages: Line Ministries have introduced various sectoral incentive packages, such as the Production Linked Incentive Scheme (PLI) by the Ministry of Electronics and Information Technology (MeitY) and the PLI Scheme by the Department of Pharma for Key Starting Materials (KSMs)/Drug Intermediates and Active Pharmaceutical Ingredients (APIs). These packages aim to encourage investment, promote manufacturing, and enhance competitiveness in specific sectors.
4. Common Digital Platform for Certificate of Origin: A Common Digital Platform for Certificate of Origin has been launched to facilitate trade and increase the utilization of Free Trade Agreements (FTA) by exporters. This platform simplifies the process and ensures efficient certification for exporters.
5. Agriculture Export Policy: The government is implementing a comprehensive “Agriculture Export Policy” that focuses on promoting agricultural exports related to agriculture, horticulture, animal husbandry, fisheries, and food processing sectors. This policy aims to provide impetus to these sectors and boost export activities.
6. Promotion of services exports: The government is actively promoting and diversifying services exports by pursuing specific action plans for the 12 Champion Services Sectors. This initiative aims to tap into the potential of the services sector and enhance its contribution to the export industry.
7. Districts as export hubs: To promote districts as export hubs, the government identifies products with export potential in each district, addresses bottlenecks faced by exporters, and supports local exporters/manufacturers to generate employment opportunities within the district. This approach contributes to regional development and boosts exports.
8. Strengthening technical standards: The government is focused on strengthening the ecosystem for the adoption and implementation of mandatory technical standards for goods, services, and skilling. This emphasis on quality and standardization enhances the competitiveness of Indian exports in the global market.
9. Energizing Indian missions abroad: The government is actively engaging Indian missions abroad to promote trade, tourism, technology, and investment goals. These efforts aim to create a favorable environment for Indian businesses and increase global partnerships.
10. Support for domestic industry: The government has announced a package to support domestic industries, including various relief measures in the banking and financial sectors, particularly for Micro, Small, and Medium Enterprises (MSMEs). MSMEs play a significant role in India’s exports, and these measures help in stabilizing the export ecosystem.

Conclusion

The impact of the lockdown on India’s export industry was significant, with an overall decline in exports during the April-June 2020 period. The Ministry of Commerce & Industry has played a crucial role in addressing the challenges faced by the export industry and implementing initiatives to boost exports. The government’s measures include policy extensions, sectoral incentives, digital platforms, and support for domestic industries. These efforts aim to revive the export sector, promote economic growth, and ensure a favorable business environment. The Ministry of Commerce & Industry continues to work towards enhancing India’s export potential and facilitating international trade.