Rupee appreciation to take shine off exports: Assocham
The sharp rise in the value of rupee against the dollar is expected to bring down country’s export proceeds to $145 billion from the targeted figure of $160 billion in 2007-08, according to industry body Assocham.
By TNN |
NEW DELHI: The sharp rise in the value of rupee against the dollar is expected to bring down country’s export proceeds to $145 billion from the targeted figure of $160 billion in 2007-08, according to industry body Assocham. The Indian rupee has appreciated by 8.35% in last six months, which is the second highest appreciation after the Brazilian currency which rose 9.28% as per the industry body.
Releasing a study, Assocham president Venugopal Dhoot said, “Rupee appreciation would adversely affect the country’s exports growth. If corrective measures are not taken to contain appreciation, the rupee might fall below 40 against the dollar in the next few weeks.”
In last six months (January-June), the Brazilian currency has appreciated by 9.28% followed by India (8.35%), Thailand (7.56%), Russia (2.08%), Malaysia (1.98%) and China (1.82%).
While currencies of Singapore, Bangladesh, Indonesia, Pakistan and South Korea have appreciated by less than 1%, currency of Hong Kong and Taiwan has been depreciating. Since India competes with both the countries, currency appreciation has become a major concern for Indian exporters.
The currency appreciation poses a threat to major export sectors such as IT & ITeS, textiles, leather, sugar and pharmaceuticals. The IT industry would loose its competitiveness as currencies of major competitors such as Vietnam and Hong Kong are not appreciating. The realisation of small and medium enterprises, which operate on thin margins, would be adversely affected, according to Assocham.
India’s textile exports would face competition from China, Bangladesh and Pakistan as their currencies have not appreciated as significantly. With currency appreciation of mere 1.82%, China would give a tough competition to the Indian pharmaceutical industry. The erosion of prices of generics and non-tariff barriers are also seen as major hurdles to the country’s pharmaceutical exports.
Releasing a study, Assocham president Venugopal Dhoot said, “Rupee appreciation would adversely affect the country’s exports growth. If corrective measures are not taken to contain appreciation, the rupee might fall below 40 against the dollar in the next few weeks.”
In last six months (January-June), the Brazilian currency has appreciated by 9.28% followed by India (8.35%), Thailand (7.56%), Russia (2.08%), Malaysia (1.98%) and China (1.82%).
While currencies of Singapore, Bangladesh, Indonesia, Pakistan and South Korea have appreciated by less than 1%, currency of Hong Kong and Taiwan has been depreciating. Since India competes with both the countries, currency appreciation has become a major concern for Indian exporters.
The currency appreciation poses a threat to major export sectors such as IT & ITeS, textiles, leather, sugar and pharmaceuticals. The IT industry would loose its competitiveness as currencies of major competitors such as Vietnam and Hong Kong are not appreciating. The realisation of small and medium enterprises, which operate on thin margins, would be adversely affected, according to Assocham.
India’s textile exports would face competition from China, Bangladesh and Pakistan as their currencies have not appreciated as significantly. With currency appreciation of mere 1.82%, China would give a tough competition to the Indian pharmaceutical industry. The erosion of prices of generics and non-tariff barriers are also seen as major hurdles to the country’s pharmaceutical exports.
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