MSME exporters facing demand squeeze in global markets

MSME exporters are facing slowdown in demand in the global markets due to the ongoing war between Russia and Ukraine and they have sought immediate intervention of the government to deal with the situation, according to industry players.

They added that the dip in demand may impact the country's exports in the coming months.

Ludhiana Hand Tools Association President S C Ralhan said the industry is passing through "acute recession" in both domestic and international markets.

"Most of the sectors including hand tools auto parts and spinning mills are working at 25-60 per cent capacity only. At the moment, we are getting very small orders," he said in a statement.

Most of the exporters said they have orders for only one or two months.

"This scenario would impact exports growth," Ralhan added.

Sharing similar views, Dalpat Forge (India) Manager Ashwani Aggarwal said the demand situation is "bad" in both domestic as well as global markets like the US and Europe.

"The government should support us to deal with the situation," he said.

Leading leather sector exporter and Chairman of Farida Group Rafeeq Ahmed said though the factories currently are running at full capacity, the order book position is gradually "dwindling" for the season.

"There are demand issues mainly in the US due to high inflation there. We as exporters are planning how to deal with this slowdown," Ahmed said.

Federation of Indian Export Organisations (FIEO) Vice Chairman Khalid Khan added that "order book position is bad".

Exports dipped, though marginally, for the first time in 17 months in July, while trade deficit tripled to a record USD 31 billion fuelled by over 70 per cent rise in crude oil imports.

The outbound shipments during April-July 2022-23, however, stood at USD 156.41 billion, an increase of 19.35 per cent over USD 131.06 billion in the corresponding period last fiscal.

While the US is top market for domestic exporters, European nations including the Netherlands, Belgium, Germany, Italy and France are among the top 20 destinations.

The ongoing war between Russia and Ukraine has severely disrupted the global supply chains.

The MSME sector account for nearly 40 per cent of India's exports.