New Delhi: With no major respite to exporters from the appreciating rupee, the Engineering Export Promotion Council has warned the government that growth in engineering exports will turn negative if the average rupee rate rises above 40 to the dollar during the year.
“If the average exchange rate rises above Rs40 to a dollar, the export growth rate in dollar terms will be negative in the current fiscal,” EEPC chairman Rakesh Shah said in a statement.
Shah, who met commerce and industry minister Kamal Nath on 13 June seeking relief for exporters, said if the domestic currency hovers around Rs40 to a dollar during the year, growth of engineering exports would stagnate at $25-26 billion, indicating a zero growth.
Nath had said on 13 June that his ministry would ask the Finance Ministry to notify service tax exemptions for exporters and increase duty drawback as well as DEPB rates to help traders tide over the crisis in the wake of the appreciation in the rupee value against the dollar.
Shah said the growth rate of 20% in engineering goods is feasible only if the exchange rate is maintained at Rs44 during 2007-08.
“Engineering exports will then be around $32 billion for the current year,” Shah added.
The Council feels that the above targets may still be achieved if exemption of service tax is notified and VAT is refunded.
Engineering is the largest foreign exchange earner and account for 20% of the country’s total exports. Of India’s total exports of $125 billion for 2006-07, engineering exports stood at over $26 billion.