By IANS
New Delhi : With the rupee appreciating by the day, the goal of India's exports reaching $160 billion in the current fiscal (2007-08) has become a distant dream for exporters, says a leading industry body.
The level of appreciation of the Indian rupee, which strengthened by 8.35 percent during the fist half of this year, is second only to that of the Brazilian currency, which appreciated by 9.28 percent during the same period, according to the Associated Chambers of Commerce and Industry of India (Assocham).
Other currencies have also appreciated against the US dollar, but not to this extent. The currency of Thailand appreciated by 7.56 percent, of Russia by 2.08 percent, of Malaysia by 1.98 percent, of China 1.82 percent and of Singapore, Bangladesh, Indonesia, Pakistan and South Korea by less than one percent.
The sectors worst hit by this appreciation in the value of the rupee are IT and IT-enabled services, textiles, leather, sugar and pharmaceuticals.
The chamber said if the appreciation of the rupee was not tackled soon India would gradually lose its competitive edge over the buoyant economies of China, Hong Kong, Vietnam and others in the IT and services sectors.
"The small and medium enterprises (SMEs) exporters who operate on thin margins are badly affected on realisations because of high appreciation of the rupee. In the highly competitive global market, hardening (of the rupee) will dampen the prospects of the exporters," Assocham said.
In textile and leather exports, India is facing stiff competition from China, Bangladesh and Pakistan and their currencies have appreciated insignificantly, compared to rupee.
"Appreciating rupee would dampen the export competitiveness by at least $15 billion in the current fiscal itself. Exporters may not be able to sustain the currency appreciation as it is high and happening very quickly," said Assocham president Venugopal Dhoot.
Pakistan and China are performing better than India in the textiles sector because their currencies are not appreciating as much as the Indian rupee and so their prices are lower, the survey said.
"Realisations are also taking a dip because of the appreciation and mostly hitting the SME exporters' segment as they operate on thin average margins," Dhoot added.