India's exports will fail to reach target

India's goal of exports reaching $160 billion in the current fiscal (2007-08) has become a distant dream for exporters, says a leading industry body, With the rupee appreciating by the day,

The level of appreciation of the Indian rupee, which strengthened by 8.35 percent during the fist half of this year, is second only to that of the Brazilian currency, which appreciated by 9.28 percent during the same period.

Other currencies have also appreciated against the US dollar, but not to this extent. The currency of Russia by 2.08 percent, of Malaysia by 1.98 percent, of China 1.82 percent and of Singapore, Bangladesh, Indonesia, Pakistan and South Korea by less than one percent.

The sectors worst hit by this appreciation are IT and IT-enabled services, textiles, leather, sugar and pharmaceuticals. If the appreciation of the rupee was not tackled soon India would gradually lose its competitive edge over the buoyant economies of China, Hong Kong, Vietnam and others in the IT and services sectors.

The small and medium enterprises (SMEs) exporters are badly affected on realisations because of high appreciation of the rupee. Appreciating rupee would dampen the export competitiveness by at least $15 billion in the current fiscal itself and exporters may not be able to sustain the currency appreciation.