PHD Chamber Clarifies Misconceptions Regarding Stronger Rupee
Recent evidences have also indicated that when rupee appreciated from around Rs 68.60/USD in November 2016 to Rs 64.86/USD in March 2017, exports growth jumped considerably from around 2.29 percent to 27.59 percent, respectively
NEW DELHI: World economy is projected to grow at 3.5 percent in 2017 as compared to 3.1 percent in 2016. on such outlook, the emergence of Rupee in the International market is a welcome step for Indian economy.
The remarkable performance exhibited by Indian exports since September 2016 is driven by rising competitiveness of India’s products and revival in global demand conditions, said Gopal Jiwarajka, President, PHD Chamber.
Our merchandise exports are expected to touch US$ 325 billion mark in 2017-18 from the current level of USD 260 billion (Annexure) .
With the advent of GST, the production processes and supply chain will expand tremendously, thereby enhancing the competitiveness of Indian products and increasing exports in the coming months, said Gopal Jiwarajka.
The empirical evidences from historical data suggest that appreciation in exchange rate of rupee with respect to dollar and value of exports register positive growth, said Jiwarajka.
In the era of strong rupee scenario during 2004-05 and 2007-08, when exchange rate stood at USD 44.93 and USD 40.24, exports grew by 30.9 percent and 29.08 percent, respectively, said Jiwarajka
It has been observed in the recent times too that strong rupee is favourable for the growth of exports in Indian scenario.
The foreign value added share in major Indian industries is relatively high such as Manufacturing and Recycling (53.55 percent); refined petroleum and nuclear fuel (33.79 percent); Basic and fabricated metals (20.81 percent); Electrical and optical equipment (19.51 percent); Textile and Textile products (15.96 percent) among others, he said
The higher the content of imported intermediate goods, lesser is the impact of depreciation of Indian rupee on exports, said Jiwarajka.
With appreciation of currency, the imported intermediate goods become cheaper and coupled with robust policy measures enhances the competitiveness and sophistication of Indian products globally, said Jiwarajka.
Appreciation of rupee tends to increase the import of indispensable intermediate goods used in exports, thereby enhancing the competitiveness of Indian products globally, added Jiwarajka.
This may actually increase the exports from India in the coming times, said Jiwarajka.