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India's engineering export growth slackened to around 9.4 per cent in July despite rupee depreciating against dollar, thereby demonstrating that a stronger dollar does not always lead to export momentum, an EEPC India analysis has said.
As per official data, engineering exports had grown 18.92 per cent in April this year, 14.59 per cent in May and 14.17 per cent in June.
According to the EEPC paper, rupee depreciated more (to the dollar) in July (6.56 per cent ) compared to June (5.19 per cent). But, despite that exports saw a slower growth in July.
When the rupee was 68 plus to a dollar in January last year, engineering exports grew about 12 per cent. A year later (in January 2018), when rupee became stronger exports, grew at a higher pace of 15 per cent, it pointed out.
“A stable currency helps exporters by providing them with predictability of dealing with the buyers. Any fluctuation and volatility on either side does not help,” Ravi Sehgal, Chairman, EEPC India, said.
EEPC, through a press release, has further maintained that it is not the Indian currency alone which has lost ground. Currencies of major emerging markets have seen value erosion against the US dollar.
“When every one else is on the same footing, extra advantage does not really accrue. The key lies in improving the domestic efficiency levels so that the cost of production is brought down. A dollar appreciation also leads to raw material for exports become expensive,” it further said.
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