Utility vehicles major Mahindra & Mahindra will target more growth in exports to benefit from the depreciation of the Indian currency against dollar, Managing Director and Mahindra Group Vice-Chairman Anand Mahindra said.
“The rupee fall is an incentive to export more. We are looking at Africa and Latin America for growth in utility vehicles,” Mahindra said on the sidelines of an awards function here today.
The rupee has declined around 14 per cent since April and on Tuesday, touched more than two-year low of Rs 46.99 per dollar. However, Mahindra, who attributed weakness in the Indian currency to turmoil in the global financial markets, does not expect the rupee fall to continue as the Indian economy gets stronger.
India’s gross domestic product growth was 9 per cent and 9.6 per cent in 2007-08 (Apr-Mar) and 2006-07, respectively. However, Prime Minister’s Economic Advisory Council has forecast 7.7 per cent growth in the Indian economy this financial year. “We’re losing nearly 2 percentage points of GDP growth and that is (a) significant drop and will affect our (auto industry) growth as well,” Mahindra said.
Over the past year, higher interest rates and inflation have reduced vehicle demand and there have been constraints on credit availability.
However, a cut in vehicle financing by bigger banks has created an opportunity for Mahindra’s vehicle financing subsidiary Mahindra & Mahindra Financial Services, said Mahindra. Market watchers are keeping their fingers crossed as the inflation rate curve has begun a downward trend with the PM’s EAC projecting a drop in inflation to 7-8 per cent by March.