With no explicit stimulus, exports are in free fall

The country must not miss out once international trade revives

Official trade data for April, released at the mid-point of the finance ministry’s five-tranche package to salvage the economy in the throes of a pandemic-induced lockdown, was the grimmest in over two decades. The trade collapse was not surprising, as the spate of national lockdowns around the world have not only dented demand and investment, but also severely disrupted global supply chains and shipping routes. India's exports, however, were already in a free fall. The government's economic stimulus package in totality offered several reform commitments, improvements in the ease of doing business along with some forbearance and a few sops for micro, small and medium enterprises (many of which are also export-oriented units). However, there was no explicit respite offered for exporters.

In an employment-intensive sector such as textiles, garment exports, which fell 16 per cent between January and March, fell 91 per cent in April. The outcome for May is unlikely to be any better and the World Trade Organisation expects trade flows to slip by between 13 per cent and 32 per cent over 2020. The country is again pitching to become an alternative investment destination for big global businesses in the hope that the Covid-19 pandemic would prompt them to hedge their China-dependent supply chains. But investment moves are a longer-term play. Meanwhile, Indian exporters shouldn’t be caught on the back foot as bigger stimulus packages, announced by other countries, kick in to revive demand and give a minor fillip to international trade.