Govt, Exporters Grope In Dark As Trade With Japan Comes to Halt.

NEW DELHI: India's exports to Japan have come to a grinding halt as the country struggles to come to grips with the havoc wreaked by last week's tsunami and earthquake . Japanese buyers have sought at least a week's time to respond to queries on orders already placed. "Our buyers have told us not to send any shipment for at least for a week," said S P Agarwal, an exporter of textile madeups to Hiroshima . Some exporters couldn't even get in touch with their buyers as a lot of establishments were shut because of lack of electricity, said Agarwal, who is also the president of Delhi Exporters Association .

"We do not know what will be the economic situation in Japan in the days to come and whether they can continue to buy," he said. India's exports as a whole will not take a major hit by the Japanese crisis as it accounted for only $3.7 billion worth of exports in 2009-10 , just 2% of India's total exports of $175 billion in that year. But merchandise trade with Japan is expected to grow several times in the coming years with the implementation of the free-trade agreement this year that will eliminate duties on a large number of products.

The commerce and industry ministry, which is more worried about exports than Japan's longterm investments, is assessing the situation and is yet to take a call on whether action needs to be taken. "It is too early to decide what needs to be done. But we are keeping a vigil," a commerce department official told ET. The gems & jewellery industry, which annually exports goods worth $330 million to Japan and an equal quantity indirectly through trading hubs like Hong Kong, has also stopped all its shipments for the time being.

"Right now we are gauging the situation. If there is an economic slowdown, exports will certainly be hurt for some time," said Rajiv Jain, president, Gems & Jewellery Export Promotion Council. But short-term losses may actually turn into gains in the long term as Japan rebuilds its economy , offering some hope. "We have already started receiving queries on potassium iodite, an anti-radiation chemical that we produce, from Japanese companies ," said Ramu Deora, president , Federation of Indian Export Organisations (Fieo).

Although Japan is one of the major producers of this chemical , it is in short supply because its production has come to a standstill after the quake. "We expect a lot of such demand to be generated as Japan gets back on its feet and starts its rebuilding process," Deora said. Exporters could also gain from additional demand from the US and the EU, big markets for Japanese exports as it withdraws temporarily from the export market. "It is sadistic to be talking of such gains, but Japan's loss would definitely translate into more business for others," another exporter said.

Source : economictimes.indiatimes.com