A Dun & Bradstreet research has revealed that the accelerating pace of bankruptcies in the US has a direct bearing on various Indian industries that export goods to the US. The research points out that Chapter 7 filings in the US have increased at an average monthly rate of 5.3% over the January-October 2008 period, while Chapter 11 filings have increased at an average monthly rate of 4.3%. The D&B research has revealed that Chapter 11 filings for commercial businesses has increased from approximately 3,600 in 2006 to an estimated 7,900, registering a 117% rise, while Chapter 7 filings has increased from approximately 11,400 to an estimated 27,800 during the same period, a rise of 144%.
Within services, key sub-sectors such as business services, personal services, and engineering and health services are the ones that have been adversely affected. Bankruptcies in apparel retailing constitute 8% of the total retail trade bankruptcies. The July-October ’08 period witnessed a 50% jump in apparel retail bankruptcies compared to the entire first half. This accelerating trend in retail failures in the US has a direct bearing on apparel exporters from countries such as India, especially in men’s and women’s clothing and women’s accessories. In manufacturing, the key sectors to be impacted are printing, industrial and commercial equipment, chemicals, fabricated metal products, food processing, auto-equipment and apparel
Transportation related equipment manufacturing/ services/trading has witnessed over 2,000 Chapter 7 and ll filings in 2008. This could have an adverse impact on the auto-component sector in India. Another sector likely to impact Indian exporters is the chemical and pharmaceutical segment, which has witnessed over 1,400 Chapter 7 and 11 filings. There are also over 100 bankruptcies in the jewellery segment, where Indian gems and jewellery exporters have significant exposure.
Further business bankruptcies are expected in 2009. This trend has severe implications for Indian exporters since the US accounted for about 13% of total Indian exports in FY2008. Source: D&B India