'Falling inflation and rupee depreciation will boost exports'
Govt was urged to continue Rupee Export Credit Interest Rate Subvention Scheme’ for selected sectors to encourage domestic MSMEsIndia’s export competitiveness has been eroded because of the steady real appreciation of rupee, said an ASSOCHAM study, while recommending steps to encourage domestic MSMEs and revive falling exports. Global experience shows that 10-15% real devaluation could be a shot in the arm for an export surge, while a real devaluation of the order of around 10% through a combination of falling inflation and allowing rupee to depreciate may provide much needed boost to exporters,” said ASSOCHAM in a study. In the study-‘What’s behind India’s Declining Exports’, the Associated Chamber of Commerce and Industry (ASSOCHAM) urged the government to continue with ‘Rupee Export Credit Interest Rate Subvention Scheme’ for selected sectors to encourage domestic MSMEs become competitive in the world. The industry body pointed out that presently, micro, medium and small enterprises sector gets loans at 12-13%, whereas India's competitors get it at around 5%. But after the inclusion of this scheme, the rate would come down to 9-10%, thus will benefit the industry considerably. “Even the high interest rate regime and the overvalued exchange rate are helping the financial markets, not the real economy and export sector in particular,” ASSOCHAM said. Referring to a rise in anti-dumping measures, ASSOCHAM suggested that the government should carry out a detailed analysis on the possible impact of the imposition on the industry. “Such duties may be detrimental to export prospects, if the duties are imposed on imported inputs used for producing export-oriented goods in the small scale sector which contribute significantly to India’s exports,” the body said. On the whole, ASSOCHAM urged the government to undertake temporary measures to ensure that ‘Indian exporters do not withdraw from important overseas markets during the period of downturn’. “This will help Indian exporters regain market as and when recovery takes place, this could be achieved through a combination of liberal market development assistance and easing export financing. Besides, markets which are expected to recover fast (USA, Germany, ASEAN, Republic of Korea, and West Asia) need special focus,” the study added. In an attempt to reduce some of the transaction costs associated with international trade, the government has been simplifying its customs procedures over the past few years. The study noted that it was important to carry forward these procedures for retaining or acquiring a share in export markets.
November 17, 2015 |3:51pm IST
to success.