Increase in rupee value may decrease exports

The recent appreciation of rupee by 9 percent between August 2006 and April 2007 is affecting Indian exporters severely. With cheaper US dollar, it is feared that the imports are going to increase. Currently imports are on the higher side with 35 percent while exports have registered a growth of 22 percent. This trade deficit will put pressure on foreign exchange earnings. In this situation, exporters are withdrawing from entering new contracts as the booming retail sector seems an easy option. Federation of Indian Exporters Organization President Ganesh K Gupta was concerned with this situation and expressed hope that Commerce and Industry Minister Kamal Nath would address exporters' cry in Foreign Trade policy while the Reserve Bank of India would look into the issue in the forthcoming credit policy. Source : fibre2fashion.com