New Delhi: Indian exports face additional costs due to delays at ports and airports in the US in the wake of government shutdown, but sectors like IT and pharma are likely to remain unscathed as their business is not directly linked to federal spending.
"The shutdown of the US government will certainly hit Indian exports because of crippling of the trade facilities at the ports and airports," Assocham President Rana Kapoor said. The US government on Tuesday shutdown for the first time in nearly 18 years - as the Republican and the Democrats failed to strike a deal on spending and budget mainly due to their differences over 'Obamacare', the flagship healthcare programme of President Barack Obama.
Engineering exporters' body EEPC India on Tuesday said Indian exports to the US face a demurrage threat due to shutdown in the world's largest economy. "Commercial ports do not come under emergency service category, so there will be a delay in port services like clearing of goods from ports due to staff shortage. This may result in huge demurrage for exporters," EEPC India Chairman Anupam Shah said.
Demurrage is a charge payable to the owner of a chartered ship in respect of failure to load or discharge the ship within the time agreed. Engineering exports are close to 20 per cent of the total export basket of the country. However, the shutdown is unlikely to affect sectors like pharmaceutical and IT atleast in the immediate term. "Indian Pharma Industry is not selling drugs to the US Government. It is selling mostly private. So, the US government shutdown will not have any impact on the India pharma industry," Indian Pharmaceutical Alliance (IPA) Secretary General D G Shah said.
With neither side blinking, despite last minute hectic efforts from both side, the White House immediately ordered the federal government agencies to begin shutting down, furloughing thousands of workers and curtailing some services for the first time since 1995-96.
NASSCOM, the apex body of the USD 108 billion IT-ITeS industry in India, on Tuesday said it does not see any immediate economic impact of the shutdown. "A majority of the business that our industry has is with the private sector and is not directly dependant on federal spending. Hence we do not see an immediate economic impact," NASSCOM said in a release.
Shutdown means that national parks will close, most routine food inspections will be suspended, paperwork will slow at government offices and many federal employees will be furloughed. Only emergency and essential services will be able to operate, as a result of which lakhs of government employees would not receive their salary for the shutdown duration.
"If, however the shutdown continues for an extended period, there will be an overall macroeconomic impact that may affect the industry. Some services such as visa processing time that depend on federal budgets are expected to see delays," Nasscom said.
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