Industry experts caution India over Greece crisis

Sai Nikesh | The Dollar Business

The ongoing economic crisis in Greece will have a negative impact on India and widening of the same would badly affect Indian economy on a larger scale, according to industry experts. “Being part of the global economy and as a nation heavily depending on foreign support, India will need to face consequences of economic actions, crises and bad financial sentiments across the world,” said B C Bhartia, president, Confederation of Indian Traders (CAIT), speaking to The Dollar Business. He went on to say that ongoing crisis may lead to outflow of capital from India and foreign investors taking back their investments or hesitating for future investment in the country. This will have a negative impact on Indian projects like Smart cities, Digital India, among others, which are dependent on foreign support. Further consequences will create difference in currencies, the result of which would be a ‘rise in US Dollar rate against Indian Rupee,’ he added. It is on the part of countries like India to wish for safety of developed economies (which bring investment to developing economies), in order to see its own purposes like Foreign Direct Investments are served. So, Government of India, using its foreign diplomatic relations, should ensure that developed economies come up with a bail-out package for crisis-hit Greece and also help investors who got held in the Greece crisis by way of investments, alongside pitching for rescheduling of loans by the European Central Bank for the crisis-facing Greece, he noted. Meanwhile, S C Ralhan, President, Federation of Indian Export Organisations (FIEO), said, “Ongoing Greek crisis is definitely a bad situation for India, especially in terms of exports. Engineering exports, Textile exports, are among other major sectors that will get affected more due to the crisis.” However, this is too early to draw conclusion and possibly will take a month time for the situation to come under little balance, he added. Suranjan Gupta, Additional Executive Director, Engineering Export Promotion Council (EEPC) of India also made a similar comment. He said, “Greek crisis will definitely have negative impact on India’s engineering exports to Europe, in view of the fact that the region accounts for around 20% of India’s total engineering exports.” India’s engineering exports to Europe have already witnessed a 10% decline in the first two months of current financial year. At this juncture, the crises in Greece, other countries of euro zone like Portugal, Ireland and Spain and a further spread of the same, will further weaken Indian engineering exports to Europe, he noted. It is noteworthy that the Greece situation beat-up the stock markets globally on Monday, including in India, with the foreign investors stepping to re-allocate their portfolios in the wake of euro weakness against various other currencies, while the companies with direct exposure to euro zone markets remained more vulnerable to the situation. Greece’s financial crisis saw an increasing trend with the country’s Prime Minister Alexis Tsipras announcing capital controls and shutdown of banks at least for a week.      

June 30, 2015 | 6:57 pm IST.