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Mahesh Desai

“Furthermore the growth is still not stable as several economies are in the grip of a second wave of the Covid19 pandemic leading to new restrictions and lockdowns. With disruptions in global supply chains, WTO predicts that protectionism would be one of the major outcomes of the Covid19 pandemic”

IT has been reported that India’s merchandise exports registered growth of 5.3 percent in September 2020, with an increase in outbound shipments for the first time in seven months since the pandemic disrupted commercial activities across sectors. Engineering exports registered a rise of 3.73 percent during September 2020. September also witnessed a decline in imports by almost 19 percent, resulting in improvement in India’s current account. Decline in imports by engineering industries such as machinery, electrical, and transport equipment was the major reason behind the imports decline. While it is too early to predict whether this signals a gradual recovery from the trade disruptions caused by the pandemic, it is a positive trend after months of economic gloom.

Globally too, there are some signs of revival as WTO has predicted a 9.2 percent drop in global merchandise trade, much better than the earlier forecast of 12.9 percent drop. WTO said a deeper trade slump could be avoided due to the rise in cross-border trade in June and July when several countries across the world lifted restrictions and gradually started going back to business-as-usual. The WTO further added that the bounceback would be much slower than earlier predictions. Global trade growth in 2021 is expected to be 7.2 percent, much weaker than the anticipated 21 percent. This is exacerbated by the IMF forecast that global output would remain much below the pre-pandemic projections over the medium term, causing a setback for all countries in terms of improvements in living standards. Furthermore the growth is still not stable as several economies are in the grip of a second wave of the Covid19 pandemic leading to new restrictions and lockdowns. With disruptions in global supply chains, WTO predicts that protectionism would be one of the major outcomes of the Covid19 pandemic.

Given this situation, Indian industries cannot remain complacent due to the growth in merchandise exports and need to focus more on self-reliance. MSMEs constitute a major portion of the Indian exporting community, at least in the engineering industry, but due to lack of resources and technology, these exporters majorly produce low to mid-value added products. These are then exported to countries such as China for further value addition and re-exported to India. This is one of the reasons why even if we increase the volume of our exports, we do not get a good valuation for the same since we are at a lower value addition level. Consequently technology upgradation and increase in value-added production is the key to resolve this issue. If we are able to shift from mid-technology to high-technology products, it would enable us to supply our domestic needs and reduce dependence on imports. At the same time with more diversified and value added product offerings we would be able to expand our presence in new destinations and improve our export earnings. Keeping this in mind this edition of IndianEngineeringExports focuses on the technological transition of India’s engineering exports.

Despite apprehensions, the rising export trend is indeed hopeful. We are grateful to the government and RBI for offering benefits and incentives to the industry to survive in these difficult times.

EEPC India has also been proactive in helping exporters reach new buyers even during the pandemic. Since several physical exhibitions across the world were cancelled because of the pandemic, EEPC India has resorted to virtual exhibitions and has already successfully conducted a few. In the upcoming days EEPC India will be organising several virtual expos including the Indian Subcontracting Virtual Expo to be held in October and FarmMech 2020 November.

I strongly believe that with such concerted efforts from both the government and industry, we will have a significant bounce-back in 2021. On this positive note, I offer my best wishes for the upcoming festive season to all my fellow members and colleagues in the Council.

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