Inflation, high interest rates eating into exports: Assocham

Updated: Thursday, August 16, 2012, 12:44 [IST]

As Inflation and high interest rates have eaten into the advantage that may have accrued to exporters due to depreciation of rupee, the government needs to press the emergency button for saving Indian exports in a highly depressed European markets and slowing US economy, an ASSOCHAM study said.

Rupee depreciated by about 25% in the last one year, the inflation based on the wholesale price index remained around eight per cent. In real terms, the impact of rising price was much more.

The situation got further compounded with the export credit staying expensive as the RBI refused to lower the interest rates.

Government needs to do a reality check along with the exporters and set realistic targets. According to an assessment done by ASSOCHAM, the export target of USD 360 billion for the fiscal 2012=13 is not achievable given the present global economic situation.

"We would be lucky if we are able to reach the level of the previous year at USD 304 billion ," the study pointed out.

It might even decelerate well below USD 300 billion, the study cautioned adding a new realistic target should be set.

The government should immediately announce incentives for the exports sector. The duty drawback rates should be revised upward and the rate of export credit should be significantly reduced, if we have to even sustain the exports achieved last year, the study said.

Moreover, the government should speed up talks on the Free Trade Agreement with the European Union so that the Indian exporters get duty-free or concessional access to the vast European market, ASSOCHAM President Rajkumar N Dhoot said.

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