Indo-US eco cooperation not affected by subprime issue: Survey

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New Delhi, Apr 10 (UNI) The tempo of economic cooperation and the level of business and entrepreneurial confidence has not been significantly affected either due to the sub prime mortgage crisis in the US or the unprecedented appreciation of rupee compared to the dollar, a survey said.

''Despite the perceived view that the recent developments in both countries had their toll on the tempo of business activities between the two countries, IUBCI has dipped only by a marginal two points (0.9 per cent yoy) to 217 in 2007 (9 months into FY'08 -Indian context) compared to December 2006, when the index peaked at 219,'' said Indo-American Chamber of Commerce (IACC) National President Farokh Balsara.

The marginal decline in the index was attributed to deceleration in the growth of export of services from India due to a variety of reasons including appreciation of rupee and slowdown in the US economy, said a statement.

The IUBCI, the second in the series- the index launched in September 2007 in New Delhi powered by ICRA Management Consulting Services Ltd (IMCS) -was released today.

IUBCI has been constructed on the basis of six sub indices.

They are the Macro Economic Assessment Index (MEAI), Thrust Sectors' Group Confidence Index (TSGCI), Firm Competitiveness Index (FCI), Consumer Confidence Index (CCI), Firm Specific Financial Performance Confidence Index (FPI) and the Business Perception Index (BPI).

Significantly, merchandise trade (both imports and exports) from and to the US registered an increase with imports from the US up by 35.49 per cent and exports by 11.5 per cent in 2007 as compared to the previous year.

The increase in imports from the US was mostly due to enhanced market opportunities to the US exporters particularly in electronics, avionics, aerospace and life sciences space.

Increase in military equipment sale to India, including the recently concluded one billion dollar aircraft purchase deal between the Indian Government and a US firm, also contributed to increase in imports from the US.

Exports of jewellery, pearls and precious stones were the main components that enhanced India's exports to the US.

The lone segment that showed declining trend in India's exports was apparel and accessories.

However, export of services by the Indian MNCs to the US registered a fall of 12.3 per cent in value terms compared to the preceding year and has been the key contributor behind the marginal dip of the index.

Significant appreciation of the Rupee compared to the greenback made services exports from India less competitive.

The overall macro environment was favourable. The Macro Economic Assessment Index (MEAI) was up by 9.5 percentage points in 2007.

However, select components of the said sub index, like FDI, remittances inflow from the US, along with most bilateral trade numbers, either fell or were static.

Sampled firms revealed decline in profitability numbers with fall in Net Margin and RONW numbers in 2007.


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