With the Dubai World crisis, Indian exporters have again started biting their nails, even as the government assured there would be no impact on the domestic economy.
The news of the debt turmoil in the emirate-owned company came as exporters had begun looking forward to a turnaround in business by December-end. Textiles and gems and jewellery exporters are particularly worried.
“Dubai is our biggest exporter (buyer) and any kind of crisis there, especially at a time like this, is sure to impact our exports. One can only hope the situation does not turn out to be similar to what was witnessed in the US last year,” Ganesh Kumar Gupta, chairman of the Vijay Silk House Group of companies and chairman of the Synthetic and Rayon Textiles Export Promotion Council told Business Standard.
In similar vein, Rajiv Jain of Jaipur-based Sambhav Gems, who is also vice-chairman of the Gems and Jewellery Export Promotion Council, said any kind of crisis would adversely impact the purchasing parity of the people. Dubai is one of India’s leading jewellery buyers; hence, even if the impact is on the real estate sector, it would affect India’s export.
Commerce and industry minister Anand Sharma played down the impact, saying the crisis would not impact India. “India is a large economy. I do not think some development in real estate of Dubai is going to impact the Indian economy. As far as India is concerned, the housing sector, the real estate sector and the construction industry is doing well. They have definitely recovered. This is confirmed by the increasing demand for construction materials, cement, steel … Even during crisis, the UAE has emerged as India’s largest trading partner, followed by China and the US.”
Ajay Sahai, director-general, Federation of Indian Export Organisations, said the impact would be marginal. He, however, said in the event the crisis spreads to Dubai’s banking and financial sector, then exporters would face problems.
According to the available official data, non-oil bilateral trade between India and the United Arab Emirates, of which Dubai is the second biggest kingdom, was $29 billion in 2007-08. The bilateral trade has been steadily rising, from $20 billion in 2006-07 and $12 billion in 2005-06. The main items traded include gems and jewellery, textiles, spices, pharmaceuticals, silk, coffee, iron and steel, among others.
India imported 7.6 per cent of its crude oil requirement from the UAE in April-September 2009, though not from Dubai.
Source : Business Standard