“There is a growing concern among the Indian exporters due to the strike. Amid the global economic slowdown, this is adding to the worries of the Indian exporters to the US, India’s largest trading partner and biggest export destination,” Chairman of the CII national committee on EXIM Sanjay Budhia said.
He said that due to the crisis, exports will be delayed which could lead to missed deadlines, contract penalties and strained relationships with US buyers.
Also, with ports on the East and Gulf Coasts experiencing disruptions, exporters may have to reroute shipments to the US West Coast or Canadian ports, incurring higher transportation costs and extended delivery times, Budhia, who is also MD of Patton International Ltd, said.
He added that rerouting may also lead to congestion at alternative ports, exacerbating delays.
“Also West Coast ports are already very congested and handling more cargo may not be feasible. Adding to the Exporters’ troubles, dockworkers represented by the International Longshoremen’s Association (ILA) announced a strike on Tuesday, halting operations at 36 major US ports along the East Coast and the Gulf of Mexico,” he said. These ports handle nearly 55 per cent of container traffic entering and leaving the US, including the largest 14 ports from Maine to Texas. Budhia said that Indian manufacturers who rely on these ports for imports of raw materials and intermediate goods might also experience delays in receiving essential inputs, leading to slowdown in production cycles and contributing to higher inflation.
“Buyers in the US are getting very concerned and constantly asking for contingency plan for Shipments in Transit and shipment route for new shipments from India,” he said, adding that it is important to hold discussions among the related parties to come to a consensus and restart the operations to minimise the macro impact.
Simultaneously, the Indian exporters must also continue to focus on their own competitiveness development to be on track to achieve the target of USD 1 trillion in merchandise exports by 2030, he said.
Federation of Indian Export Organisations (FIEO) Director General Ajay Sahai said that it is a matter of concern.
“If the strike continues for long, it will affect our exports,” Sahai said, adding that transportation cost is already high.
The US has emerged as India’s top trading partner during 2023-24 with USD 120 billion (exports USD 77.51 billion and imports USD 42.2 billion) worth of merchandise trade. It was USD 129.4 billion in 2022-23.
According to the commerce ministry data, China was India’s top trading partner from 2013-14 till 2017-18 and also in 2020-21.
Before China, the UAE was the country’s largest trading partner. The US was also the largest partner in 2021-22 and 2022-23.
The strike does not augur well for India as its outbound shipments dipped by a steepest decline in 13-month falling 9.3 per cent in August to USD 34.71 billion.