Rupee appreciation threatens EEPC with zero export growth

Kolkata, Jun 20 (UNI) With the plummeting Dollar-Rupee exchange rate threatening to bring down export growth rate to zero level, Engineering Export Promotion Council has called upon the Government to take a string of measures to help achieve a 20 per cent target.

The Council had suggested that in order to compensate exporters against rupee appreciation, the Government should formulate and enhance the duty neutralisation schemes and take various steps, including reduction in Value Addition norms to 25 per cent from 50 per cent for engineering items.

" India's engineering export growth will hover between 25 and 26 billion Dollars indicating zero per cent growth if the average exchange rate remains Rs 40 to a US Dollar in 2007-08. An export growth rate of 20 per cent is feasible, provided the exchange rate is normally distruted at Rs 44 a US Dollar during the period, " EEPC Chairman Rakesh Shah today said.

He said a zero growth in Dollar terms implied a negative growth in Rupee terms for engineering exports which was curcially based on the Rupee-Dollar exchange rate.

As per the DGCIS date released on June one, 2007, it was estimated that the country's exports growth was 23.06 per cent in US Dollar terms while it was 15.39 per cent in Rupee terms for April this year. It was from April 17 last that the Rupee began appreciating when it breached the Rs. 41 barrier and it touched the RS 40-mark on April 25.

" The Council believes that even though the exports growth figure from April do not show the full impact of Rupee appreciation, there are indications, particularly with regard to engineering exports that the Rupee appreciation is having a negative impact on exports growth and if this trend continues, setting an export target for the current fiscal year will be an uphill task, Mr. Shah said.

He observed that the Government should also come out with exchange rate stabilisation scheme in consultation with the Reserve Bank of India(RBI) to compensate the exporters for a portion of the loss due to the Rupee appreciation.

UNI