India Sets $160 Billion Export Target

NEW DELHI (AP)- India's government set an ambitious $160 billion target for merchandise exports in the current fiscal year through March 2008, but traders remained concerned that the rupee's sharp appreciation could hurt exports.

Commerce and Industry Minister Kamal Nath said the target, which assumes a 28 percent growth compared to last fiscal year, was based on the performance over the past three years, during which India'sexports nearly doubled to $125 billion.

Nath said the government expects exports to grow at the same pace this year and the year after as well. India's fiscal year runs from April through March.

''In 2008-09, our exports will cross S$200 billion,'' Nath said.

Trade groups, however, said it would be difficult to sustain the momentum if the Indian currency continues to strengthen, denting the competitiveness of Indian exports.

The rupee has appreciated nearly 10 percent against the U.S. dollar over the past year and reached a nine-year high of 41.90 per dollar earlier this week.

''We would like to see the rupee depreciate to 43 per dollar and stay stable at that level,'' said G.K Gupta, president of the Federation of Indian Exporters Organization.

Nath said the government factored in the impact of an appreciating rupee while setting the $160 billion export target for the current year.

''If it's wasn't for the rupee, I would have set a higher target,'' he said.

In the annual trade policy, the minister added 16 countries, including 10 central Asian economies that were formerly with the Soviet Union, to what is a called the ''Focus Market'' program that now covers 57 countries. Under the program, exporters can claim duty concessions totaling 2.5 percent of the value of exports to these countries.

The policy also expanded another plan, which gives exporters similar benefits for focusing on certain products. In addition, it proposed to encourage export of high-tech products with fiscal incentives.

These measures, Nath said, will help achieve the export target, which is critical to keep the broader economy on a high growth track.

''Exports are no longer a means to generating foreign exchange. Now exports are drivers of (economic) growth and a source of employment,'' Nath said, unveiling the 2007-08 trade policy.

Until the early 1990s, India had a socialist economy with high barriers to trade. Exports formed a very small share of national income and were seen mostly as a source of foreign exchange required to meet such imports that were necessary for industrialization at home.

Over the past decade, however, exports have grown quickly as the country switched to a more open, market-oriented economy. A third of India's gross domestic product now comes from exports.

Although exports did well, rising 25 percent last year, latest data showed imports grew faster, leaving the country with a wider trade deficit at about $57 billion.

Imports in the fiscal year ended March totaled $181.37 billion, compared with $124.63 billion in exports.

The numbers do not include export and import of services such software and call center operations.

 

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