The Hindu Business Line : Jaitley keeping close watch on rupee movement

THE Union Commerce and Industry Minister, Mr Arun Jaitley on Sunday said his Ministry was alive to the hardening rupee's drag on India's dollar denominated exports and was keeping a close watch on this trend. His Ministry would also discuss this issue with the Finance Ministry.

Mr Jaitley also agreed with the exporters' view that the hardening of the rupee to the extent of 7 to 8 per cent in the last one year had affected the country's exports especially when 80 per cent of India's exports are dollar denominated.

The Union Minister, who was addressing the members of the Tirupur Exporters Association (TEA) here, however, said that notwithstanding this phenomenon, India's exports last year grew at over 19 per cent. Though China had recorded 22 per cent export growth last year, its currency had been pegged to the dollar and taking this into consideration, India's growth rate should be comparatively treated one of the best in the world. This should give tribute to our export competitiveness and the growth in exports was made possible, according to Mr Jaitley, by the cost cutting and improved productivity in our manufacture.

The Union Minister's observation on the hardening rupee came in the wake of promptings from the TEA President, Mr A. Sakthivel who drew the attention of Mr Jaitley over the erosion in India's export value due to the losing rupee-dollar parity. The TEA President had suggested for allowing garment exporters the option of rupee invoicing, lowering export credit at 4 per cent (on par with LIBOR rate) and ECGC cover for foreign currency exchange risk.

As for the opening up of the textiles sector for global competition and the quota free regime beyond 2005, Mr Jaitley said India had to prepare for this competitive market for more than one reason and the strong indication was that the textile industry in high cost economies like developed countries would not be able to compete with low cost production bases of developing countries. The beneficiaries of the evolving free market will be those in these developing economies who managed to produce the best products at cheaper rates.

"It is in this background, I personally feel that labour law reforms should be expedited at least to cover the export sectors so as to liberate the system that holds up the path for achieving higher productivity," said the Union Minister who was of the view that the textiles and the construction/real estate sectors were the ones that had wide scope to offer larger job opportunities.

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