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Exports to contract US, Europe cancel orders

The Federation of Indian Export Organisations (FIEO) has revealed that after sudden growth in February, exports are fast heading towards a lengthy period of contraction as buyers cancel major shipments in foreign-exchange (forex) earning sectors, fear exporters.

A string of order cancellations by major clients in the US and Europe — two major centres of the coronavirus outbreak — is expected to massively hit sectors like engineering goods and apparel. More than 40 per cent of India’s engineering exports land up in both markets, while Indian apparel is already under threat from cheaper Bangladeshi and Vietnamese alternatives in their primary export destination of Europe.

AEPC has demanded immediate relief in terms of faster clearance of banking and packing credit, late realisation of export bills, and raising of advance limit to 25 per cent without any collateral to ease working capital constraints. Also, the council has demanded cancellation of penalty on advance forex booking and deferment of equated monthly installments by six months to start with

Exports had caught a rare breather in February, rising after six months, leading to hopes of a recovery period beginning soon. However, policymakers are not convinced as yet.

 
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