Indian exports are not as vulnerable to a rising rupee as many seem to believe. Look at the sharp pickup in merchandise exports in February to 35.3% in dollar terms and 21.7% in rupee value, and it suggests that those who have it in them to sell overseas, have it, and those who don?t, don?t. Have currency fluctuations, then, been blown out of proportion as a danger? Not entirely. If India fails to meet its overall export target of $160 billion for fiscal 2007-08, as seems very likely now, the strong rupee would be an important part of the reason. However, the very fact that export growth in the first 11 months of the fiscal was on par with that of the previous year indicates that exports can absorb such ?shocks? as a sudden 10% currency appreciation? part of an important RBI test last year to gauge the effect on several variables. Either exporters have pumped up volumes or secured better prices, commendable achievements both, and probably the result of private efforts. It helps, of course, that international prices have been buoyant, especially of commodities.
Minerals and agriculture products saw large price increases over the year, boosting the latter?s exports by almost double to 42.4% in dollar terms. Ores and minerals recorded a 21.5% bounce. But the performance on the manufactured goods front has not been very uniform, with export growth decelerating in most sectors even while some labour-intensive products like gems & jewellery and textiles registered improved performance. Engineering products and chemicals, which account for a third of total exports, showed a sharp drop-off in growth. This, even as exports of vehicles rebounded joyously, revving up fivefold to 41%. If evidence were needed that sectoral fortunes depend on management initiative more than external factors, this offers plenty. After all, it was the domestic vehicles slowdown that turned the focus outwards. This makes a difference, since merely shipping surplus production abroad is not the same as marketing products there. Will other exporters also orient themselves to satisfying foreign needs better? That Africa remains a mainstay as an export market, despite slowing of growth, is an indication of the relevance of market specifics. Exports to Europe have also shown impressive growth. But the success story to watch is the boom in exports to the rest of Asia.
