Textiles and garments, drugs and pharmaceuticals, leather products including footwear, some food and agro products and information technology are expected to benefit from rupee fall. In an internal report prepared by FICCI, these sectors are typically ones that have high share of forex earnings in total income and have limited forex spending. FICCI discussed this report at its national executive committee meeting chaired by Naina Lad Kidwai here today.
With rupee falling sharply since July, the textiles and garments exports could see a much higher growth during July-August period. The sector has been recording reasonably good exports performance since March backed by rupee fall. The year on year growth recorded during textiles and garments exports during March-June has been 11% as against minus 10.6% recorded in the corresponding period last year.
Further, FICCI in its report said drugs and pharmaceuticals sector could benefit from the weakening rupee as more than 40% of industry's revenues come from exports. Exports in this sector have seen a moderate growth of around 5% in first quarter of FY14.
In case of leather products including footwear, exports for July-August is expected to show much better results with its over 35% contribution of exports in industry's total income. Leather sectors' exports have recorded 11.4% growth for March-June as against negative growth of minus 3.1% last year.
Moreover, information technology including software services and ITeS will see substantial gains. More than three fourth of the industry's revenues come from exports and with fall in the rupee value competitiveness of IT services has improved further.
According to FICCI, marine foods, meat, Basmati Rice and tea will benefit despite slide in rupee. Marine products export grew at 28% during April-June against 9.8% while meat exports recorded growth of 26.3%. In case of Basmati Rice, the growth was 62.8% against 7.3% while tea exports rose at 8.7% against negative growth of minus 12.5% last year.
FICCI's suggestions to boost investor confidence
Meanwhile, FICCI national executive has made a pitch for bringing down the interest rates to stimulate domestic investments and set off the economy towards higher growth. It has called upon the government to utilize surplus cash balances of PSUs for spurring investments. This is necessary when Rs 2.8 lakh crore cash surplus is lying idle with the PSUs.
Furthermore, FICCI said the government may consider issuance of rupee bonds to NRIs to shore up the rupee in the short term and bring valueable forex back home. It has recommended promotion of NRI deposit accounts in banks. According to FICCI, the Central Bank should consider removal of restrictions on interest rates on foreign currency deposits.
Besides, the government can consider currency swap agreements with other countries and standby credit facility under IMF.
