The US shutdown may have shaken up the global markets, but hasn’t quite dented the spirit of exporters, most of whom believe it will be a temporary lockdown, unlikely to last beyond October 17.
“We don’t foresee any impact on the healthcare and pharma industry and it will be business as usual,” said a spokesperson of pharma company Lupin.
Premal Udani, chairman, board of trustees, The Clothing Manufacturers Association of India, also ruled out any impact of the US shutdown. “However, if the shutdown lasts longer, which is unlikely to last beyond 7-10 days, and the US economy starts getting impacted there, there is likelihood of some slowdown in exports,” he said.
Vipul Shah, chairman, Gems & Jewellery Export Promotions Council, said the shutdown is unlikely to last very long and would therefore have little impact on the trade. Last financial year, the total gems & jewellery export stood at $45 billion.
The US accounts for 12-14% of the total outbound shipments from India, estimated to be worth $300 billion. In 2012-13, exports to the US were $36 billion.
Players in IT, travel and healthcare are also confident that there will not be much of an impact as they come under the ‘essential services’ bracket which is exempted from the shutdown.
“Obtaining a US visa from India will not be a problem because consular services at US embassies and consulates around the world are largely funded by application fees, not annual appropriations. Visa applications filed by foreigners wanting to enter the United States will continue to be processed, and immigration and customs check in facilities at all US airports, air traffic controllers are functioning normally as these come under ‘essential services’,” said Karan Anand, head - relationships, Cox & Kings.
Madhavan Menon, managing director, Thomas Cook (India) also said that flight operations are unlikely to be impacted and advance bookings for holidays in the US are expected to grow 40%.
The IT outsourcing industry, which earns over 45% of its revenues from the US, though, is on wait-and-watch.
“While the earlier shutdowns in 1995 and 1996 lasted a total of 28 days, a majority of the business that our industry has is with the private sector, and is not directly dependent on federal spending.
Hence, we do not see an immediate economic impact. If, however the shutdown continues for an extended period, there will be an overall macroeconomic impact that may affect the industry,” industry body Nasscom said in a statement.
To be sure, the rupee gained 45 paise versus the greenback during the day before closing at 62.47, still up 15 paise over the previous close.
Jagan Ramaswami, director (consulting), strategy & technical insights, Frost & Sullivan, said, “The longer the slowdown lasts, the longer the recovery would be as backlogs can take weeks to clear. Decision making might slow down. Approvals for new projects, regulatory clearances for manufacturing firms, product approvals and the like would then be hampered sending a trickledown effect into sectors like healthcare, pharma, ITES, engineering and financial services.”
Anupam Shah, chairman of EEPC India, also feared that since commercial ports do not come under emergency service category, there may be a delay in clearing of goods from ports due to staff shortage. “This may result in huge demurrage for exporters,” he said. Shah sees India’s engineering exports, 20% of which is to the US, growing 5-6% in September and 10% during the full fiscal.