Rupee depreciation between July 2015 and July 2016 has been equal to the rate of Consumer Price Index (CPI) giving no advantage to the exporters on exchange rate whereas the cost of production and transactions had risen, an exporters body said on Monday. The analysis of engineering exports done by the EEPC India shows that during the said period, the rupee depreciation is about the same as the CPI.
“Indian exporters were also paying real interest rates much higher than the competitive peers like China, Malaysia, Argentina and Mexico, leaving Indian exports less competitive in the international market,” EEPC said in a statement. To the extent of rising cost of production, rupee inched up, but on the other hand, the pricing power of Indian exporters has not been improving in the tough global markets, it noted.
“While the pace of decline in the exports has declined, the development has to be seen on a very base year-on-year since the drop in shipments had started some 20 months ago,” EEPC India Chairman T S Bhasin said.
While the real interest rate in India is about nine per cent, it is less than five per cent in China and Malaysia, below one per cent in Mexico and minus four per cent in Argentina putting Indians on disadvantage against other competitors, EEPC said.