Rupee appreciation continues to the scare exporters, especially in the medium and small segment as 80% of them termed the recent Rs 1,400-crore relief package as inadequate. They had demanded a long-term prudent export strategy to help reduce transaction costs with restoration of suitable export infrastructure, an Assocham study said.
Of 400 large, medium and small exporters interviewed by Assocham Business Barometer (ABB) on the ?Rs1400-crore Exporters Relief Package?, 80% complained that 10% rise in rupee valuation has rendered the exports proceeds uncompetitive.
About 68% said delay in implementing service tax exemption was adding to their woes. About 90% held that the government response in identifying and promoting potential exports market for them was almost ?negligible?.
Assocham president Venugopal N Dhoot said, ?Unabated rising transactions cost and lack of availability of proper infrastructure coupled with little government support have in recent past threatened their better prospects for higher export proceeds.
The survey was carried on exporters, export promotion councils and commodity boards. Simultaneously, the ABB team also conducted a secondary research on major export destinations of India and their currency movements to check whether the recent package would provide any relief to the exporters.
India?s major export destinations are the US, the UAE, Europe, Hong Kong and Singapore.
The rupee witnessed a sharp appreciation in case of Japanese yen which is 10.33%, followed by the US dollar 9.61%, Hong Kong dollar by 9%, Taiwan dollar by 8.9%, Indonesian rupiah by 8.45%, Pakistani rupee, Singapore dollar by 7.6%, Chinese yuan by 5.7%, Russian rouble by 4.9% and Euro by 4.12%.
Interestingly, rupee has depreciated against Brazil real by 2.8% and Thailand baht by 3.5% but this makes no impact or difference to the Indian exporters. The Asian countries will give stiffer competition in lieu of rupee appreciation.
Textiles, leather, gems and jewellery are already witnessing a slowdown on account of rupee appreciation.
The rupee has appreciated very high against the currencies of these countries, making the Indian exports uncompetitive in the international market. Indian exports compete with that of the Thailand, Indonesia, Malaysia, Pakistan and Bangladesh.
When compared with the US dollar among the competitors and major export destinations of Indian rupee had shown the highest growth in appreciation taking away the export competitiveness, as the competitor?s currencies have not appreciated to that extent.
There are signs of further surge of rupee and it will be a big concern for the SME segment of Indian exporters.
India?s export growth in 2005-06 over 2004-05 in terms of rupee is 21.60% whereas in dollar is 23.41%.
Exports during May 2007 were valued at $1,861.28 million, which was 18.07% higher than the level of $1,0045.99 million during May 2006.