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. Merchandise exports had collapsed by over 60% and imports contracted only slightly less. Only two of India’s 30 biggest export products clocked positive growth — iron ore and pharmaceuticals, the latter by just a quarter of a percent. Thanks to the sharp dip in global oil prices, higher volumes of petroleum exports didn’t help much in value terms. 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. The Reserve Bank of India, on May 22, did unveil a few measures, including a special ₹15,000 crore liquidity facility for the Exim Bank of India and a six-month extension for importers to complete outward remittances. For exporters, the maximum permissible credit period from banks was extended from 12 months to 15 months, for disbursements made up to July 31, 2020.

The three-month credit extension for exporters was, in fact, not a new measure and had already been announced by the central bank on March 23. So its repackaging two months later as a fresh move suggests policy makers are running short of ideas to prop up a key employment-generating bulwark of the country’s economy post-liberalisation. In an employment-intensive sector such as textiles, garment exports, which fell 16% between January and March, fell 91% in April. The outcome for May is unlikely to be any better and the World Trade Organization expects trade flows to slip by between 13% and 32% over 2020. The prognosis gets even murkier when one adds to this the new barriers on trade in medical and food supplies imposed by over 90 countries, and an increasing tendency to look inward for essential supplies (as India is doing too with its emphasis on self-reliance). 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.