Fall in re-export to some Gulf markets

Traders have substantially slowed down their exposure to the politically sensitive Gulf nations such as Syria, Yemen, Egypt, Bahrain, Libya Morocco, Tunisia, etc. Most traders have outstanding dues from these markets, say exporters.

Indian exporters to these countries who route their products through Dubai are keeping their fingers crossed. Fruits and vegetables traders are keenly watching as Syria is a major source of supply to the GCC countries.

Speaking to 'Emirates 24|7', traders said the re-export to these markets have come down by 10 to 20 per cent because the main dealers in these countries are keeping minimum stock. They prefer to keep their liquid cash, instead of stocks of goods that can attract looters. 

“We had good business with all these countries, but for the last three to four months, we have reduced our exports to these markets as customers from these markets are yet to clear their previous bills. Our invoices are not paid as businesses are disrupted by the crisis. Some traders have their stocks and assets destroyed in the arson," said an official from a leading automobile spare parts reporter from Dubai. Many traders at the Automechanica trade exhibition noticed the absence of traders from some of these countries.

“Distributors and big dealers in these countries are now not keen to keep big stock because they are vulnerable to arson and rioting. Nobody wants to buy goods on credit or after paying liquid cash because the shops and businesses are the first target of public anger and demonstrations. We have seen a 20 per cent drop in our exports to these market, especially Egypt and Libya where social unrest is still high,” said a leading tyre exporter from the regional.

T H Venkatesh, General Manager, Exports, J K Tyre and Industries, said Indian companies have experienced a sharp fall in their exports to the Middle East markets due to the political unrest. “We have seen a 10 to 15 per cent drop in our normal tyre exports to these countries, because tyre is an inflammable material and it could be the target of fire hazards or arsons. Traders want to keep minimum stock or no stock at all and they want to keep liquid cash. Distributors in these countries don’t want to buy on credit and sell and the trend is common to all the countries affected by the political unrest.

“Indian tyre companies export more than Rs2,200 crores worth of tyre ayear and nearly 25 per cent goes to the Middle East market, mainly routed through Dubai. It is a very important market for Indian companies and for JK Tyres, too,” he said. The Exports Credit Guarantee Corporation of India has not downgraded the rating of Libya, Egypt or Yemen, However, it has restricted the cover and exporters will have to get prior permission before exporting to these countries.

UAE had recently stopped export of four-wheel drives from the UAE to Libya as these vehicles could be used in the ongoing fighting between government and rebel forces. The UAE Foreign Ministry said it will not allow export of four-wheel vehicles and equipment that may be purchased from the local markets, Jumaa Mubarak Al Junaibi, Undersecretary of the Ministry of Foreign Affairs, said in March 2011.

“We have stopped entertaining clients from some of these countries, because our payment is pending and the money due for previous exports is yet to come back. These markets have been very good in terms of market size and volume, but we are keenly waiting and watching,” said the export manager of another leading automobile spare parts company.

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