Global slowdown may affect India's exports

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Staff Reporter | 04 Jun, 2008
Despite the fact that Indian exports have begun to regain competitiveness in the international market owing to a fall in rupee value against the dollar, global rating agency Moody's however reported that global economic slowdown may play spoilsport for Indian exports.

"Considering that the rupee has recently retreated, the price competitiveness of Indian exports will stop declining. The biggest risk to India's export outlook is now purely weakness in external demand," a Moody's report on India's foreign trade said.

Moody's report comes a day after official data showed Indian exports clocking an impressive 31.5 percent growth in the first month of the current fiscal to $14.4 billion.

The report said slackening consumption in developed nations, particularly in the US, which is the biggest export market for India, would hurt the Asian nation's outbound shipments.

"India will have to explore intraregional trade opportunities in order to sustain export revenues," it said.

Pointing out that the export data "is a little surprising," the international agency said, "the country's export growth is showing absolutely no signs of a slowdown, despite earlier complaints by exporters about the negative impact of a stronger currency," it said.

It further said the country's import growth has remain "robust" notwithstanding the "steady doses of monetary tightening by the central bank."

Fuelled by a 46 percent growth in oil imports, India's total imports were valued at $24.27 billion during April this year. The high import bill resulted in a trade deficit of $9.9 billion, in line with Moodys' projections of $8.9 billion.