Rupee appreciation hits Indian exports

Friday, 05 September 2003, 19:30 IST
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NEW DELHI: Appreciation of the rupee against the dollar has considerably hit Indian merchandise exports growth, bringing it down to 9.29 percent for April-July and dipping further to just 5.75 percent in July. "The export growth target of 12 percent now remains a distant dream," said the Federation of Indian Export Organisations (FIEO) in a statement Friday. Till June, India's merchandise exports had recorded double-digit growth with 11.06 percent rise in the first quarter from April-June to reach $13.14 billion worth as against $11.83 billion in the same quarter last year. After a growth of 19.18 percent in 2002-03 to net a record $52.2 billion, India had been banking on a double-digit growth this year too. India is aiming at capturing one percent of global market by 2007, up from 0.8 percent currently. "The slump in exports is primarily due to the appreciation of the rupee against the dollar. The competitiveness as well as profitability of exporters has been seriously eroded. "With imports becoming cheaper, Indian companies hitherto procuring goods from within the country are now looking at overseas markets, giving a jolt to domestic manufacturing sector," said FIEO. Indian imports went gone up by 17 percent in July and overall 22.73 percent during April-July. The trade deficit has more than doubled during the first four months of the 2003-04 fiscal compared to the corresponding period last year, FIEO has pointed out. To offset the adverse impact of appreciation of rupee, FIEO is planning to convene a meeting of heads of various export promotion councils and forward a proposal to the Reserve Bank of India (RBI) and the commerce ministry to help "arrest continuous erosion of profits."
Source: IANS
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