Even as the US Government began the partial shutdown process on Tuesday, travel and infotech companies here said they did not anticipate any major impact. But industry bodies pointed out that exports to the US could take a hit.
Rana Kapoor, President of Associated Chambers of Commerce and Industry of India, in a statement said, “The shutdown of the US Government will certainly hit Indian exports because of crippling of trade facilities at the ports and airports.”
Visa issue
Tour operators said the shutdown was not likely to have any major impact on travellers. Karan Anand, head-relationships, Cox & Kings Ltd, said obtaining a US visa would not be a problem as consular services at US embassies and consulates around the world were largely funded by application fees not annual appropriations.
“Visa applications filed by foreigners wanting to enter the US will continue to be processed. Flight operations across all airlines to the US will not be affected,” he said.
But, if leisure tourists have any of the 401 national park service sites, including the iconic Statue of Liberty, on their itinerary, it will have to be changed, as all national parks and such sites will remain shut.
However, Anand said, “Indian customers prefer going to theme parks such as Universal Studios, Disney World in Los Angeles or indulge in shopping. They do not prefer national parks.”
Tour operators also said that this was not a big season for Indian leisure tourists to travel to long-haul destinations such as the US.
Subhash Goyal, Chairman, STIC Travel, said, “Most leisure tourists do their long-haul travel during summers. Usually honeymooners are looking to book trips to the US in this season and some are opting for other options.” For corporate travellers, it’s going to be business as usual.
IT industry body Nasscom, said, “A majority of the business that our industry has is with the private sector, and is not directly dependent on federal spending. Hence, we do not see an immediate economic impact. If the shutdown continues for an extended period, there will be an overall macroeconomic impact that may affect the industry.”
It added that some services such as visa processing time that depend on federal budgets are expected to see delays.
Engineering exports
The US Federal Government shutdown may hit Indian engineering exports to that country, Anupam Shah, Chairman, EEPC India, an engineering export promotion body, said in Kolkata on Tuesday.
The US consumed nearly one-tenth (11 per cent) of India’s $57-billion engineering exports last year. Exports to the US were down 12.3 per cent during April-August this fiscal.
According to Shah, the shutdown — which was announced by the US Government after the two houses of Congress failed to agree on a new budget — would substantially reduce the demand.
“As the US economy closes down, our export might slow down as well. The consumers will be spending less and individuals will be left without pay, (resulting in a sharp decline in demand),” Shah said at a press conference here.
According him, delay in port services in the US would also impact export operations, if the shutdown issue was not resolved immediately.
“Commercial ports do not come under emergency service category. So, there will be delay in port services like clearing of goods from ports owing to staff shortage. This may result in huge demurrage for exporters,” he said.
Growth and benefits
Meanwhile, Shah said exporters were upset with the Finance Ministry’s decision to cut back duty-drawback benefits on some engineering products.
The reduction in duty drawback, neutralised the benefits of devaluation of Rupee against US dollar.
EEPC has lowered its growth expectations to 10 per cent (from 15-20 per cent) this fiscal, Shah pointed out.
The engineering export promotion body has sought a financial support worth around Rs 500 crore to upgrade technology in the engineering products sector to boost export growth.
According to a PTI report, “The 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,” said the Indian Pharmaceutical Alliance Secretary General D.G. Shah.