New Delhi: 79% exporters surveyed on Prospects of 2007-08 Exports Targets fixed by government, felt that these targets are too ambitious to achieve in the backdrop of sharp rise in rupee value and emerging slowdown in global economy, particularly US and EU, according to the Assocham Business Barometer (ABB).
“The appreciating rupee is a matter of concern for 59% exporters who want intervention of RBI. Appreciating rupee is making exports uncompetitive. Also 80% exporters who were surveyed felt that further hardening of the rupee might lead to a slower growth in their respective sectors and in that scenario expected growth in exports, as a whole would be around 10%.
The report cites that “RBI Annual Policy 2007-08 fails to address problems faced by exporters”.
* 55% felt that global slowdown is a reason for slowdown in exports growth. Slowdown of US and EU is a major concern and infrastructure support from the government in identifying new potential markets is needed.
*60% felt that growth in exports will be 10-15% in the current fiscal year. Government must make note of realities like hardening rupee, increasing interest rates, poor infrastructure facilities and increasing high transaction costs. All these are making Indian products uncompetitive in the global market .The government should facilitate trade with other potential countries on a proactive basis.
* Export growth is projected to be slower at 15.7 % given the projected decline in world GDP growth 0.5 percentage points and slower rise in international prices. On foreign trade, the country’s merchandise exports have decelerated during 2005-06 over 2004-05 and also during April-November 2006-07 over the corresponding period of 2005-06. India’s major exports go to the US.
The above ABB survey was carried on exporters, export promotion councils and commodity boards in India to find what they thought and if the export target of $160 bn is achievable or not. 400 exporters, both small and large were surveyed from diverse export backgrounds.
Simultaneously the ABB team also conducted a secondary research on the major export destinations of India to check conduciveness for a robust export target growth of $160 bn set in the FTP 2007-08.
ADB’s flagship annual economic publication, Asian Development Outlook (ADO), projects India’s economic growth to moderate to 8% in FY2007 and then rise to 8.3% in FY2008, down from about 9.2% achieved in FY2006, the highest since 1988. The ADB forecasts modest rupee appreciation will contain export growth. Export growth forecasts show decline for the current fiscal year. This is especially true of manufactured exports, and could reflect real exchange rate appreciation.
The IMF projects India’s economic growth at 8.4% and 8% respectively this year and next. The real export growth projections for India are at 14.2% and 16.3% respectively for this year and next.
Given the forecasts and predictions by NCEAR, ADB and IMF give us a conclusion that achieving the target of $160 bn is quite unrealistic and ambitious said President, Assocham.