Noting that India largely remains unaffected by the global turbulence in financial markets due to US sub-prime crisis, Finance Minister P Chidambaram said on Friday that there could be however some moderation in exports demand.
He also expressed the hope that the country would manage the massive capital inflows that has resulted in rupee appreciating by over 10 per cent this year, hurting the interests of exporters.
"The fall of this (sub-prime) crisis is that there could be some moderation in exports demand from India," Finance Minister P Chidambaram said at a Confederation of Indian Industry function held to welcome Iceland business delegation in New Delhi.
The finance minister said said fortunately India remains largely insulated from the global turbulence caused by US sub-prime mortgage crisis.
"We cannot afford shocks and major turbulences in our markets, so we are cautious and calibrated in opening up the capital and financial markets. But we have set the course to open up our markets," he added.
On massive capital flow into the country, the finance minister said, "In the last few months, we had to cope with the rush of capital inflows in India. We are confident that we will gain mastery in this aspect."
Huge capital inflow has pushed up the rupee by over 10
per cent this year, hurting exporters. The export growth has more than halved since last year.
Exports for April-September period this year increased to $72.28 billion from $60.98 billion in the same months last year, showing a growth of 18.52 per cent.
Further, reflecting a squeeze in the margins for exporters, the export growth in rupee terms was only 4.31 per cent in September this year.
Textiles Minister Shankersinh Vaghela had recently said that about 10 lakh workers in textile and apparel sector are expected to lose jobs as the grim situation faced by the industry on export front continues due to a strong rupee.
Hit by the appreciating rupee, textile exporters had recently met Chidambaram and asked for more packages.
The finance ministry has already announced some relief measures for exporters, aggregating to Rs 5,000-5,500 crore (Rs 50 to Rs 55 billion) first in July and then in October.
The package included two per cent interest subvention for pre-and post-shipment credit and payment of interest on exchange earners foreign currency accounts. They have also been given exemption on service tax on seven items for exports.
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