Global meltdown wipes out Rs 1,792-cr export orders

NEW DELHI: A government survey of the export sector has thrown up a grim picture of severe job losses and order cancellations. Senior government officials have warned of many export units closing down and thousands of jobs being lost if a bailout of exporters is not launched soon.

A survey of 125 companies by the commerce department has revealed that the companies lost export orders worth Rs 1,792 crore during August-October 2008 and were forced to lay off 65,000 workers.

The commerce department had carried out the survey to find the extent of hit exporting units had taken due to the global financial meltdown and the resulting credit squeeze and demand slowdown.

A senior official in the commerce department said that if steps to bail out exporters are not taken now, “not hundreds but thousands of units will close down within a few months”.

The exporters are suffering on many counts. While there is lower demand from foreign buyers due to recession in the Western economies, banks in India are also not willing to honour letters of credit. This is making it difficult for exporters to fulfil whatever little orders they have. In October 2008, exports growth entered the negative territory for the first time in five years, registering a fall of 12% from a year ago.

The official pointed out that the problem in the country was not of inadequate liquidity but unwillingness of banks to give loans to exporters. “We were amazed to find out that banks were actually asking some exporters not to take additional orders,” the official said.

The committee of secretaries working on the incentive package for the industry has been discussing a mechanism to ensure there is no slowdown in lending. According to the plan, to be executed by the financial services department in the finance ministry in cooperation with banks, loans made by various branches of banks will be noted and bank managers asked to explain the reason in case a slowdown is noticed. Bankers will be asked to meet SME entrepreneurs to address their problems.