US downgrade may not majorly impact exports: Sharma

The government today said that downgrading of the US sovereign rating is unlikely to have a significant impact on India's exports and the global economy.

Commerce and Industry Minister Anand Sharma said in a written reply to the Rajya Sabha that the impact (of the US downgrade) on the global economy and India's overall exports was unlikely to be significant.

Rating agency Standard & Poor's, which had earlier this month stripped the US of its coveted 'AAA' rating, cautioned that exports as well as liquidity positions of Asia-Pacific economies could be hit by the downgrade.

Sharma said the "upward pressure on interest rates and adverse impact on the US demand for goods and services, including that for Indian exports to the US, are also not likely to be significant."

According to the Minister, with other things remaining the same, lower credit ratings tend to raise borrowing costs for the downgraded entity.

"With regard to the US government, no significant impact is discernible at this time and in general, analysts are not predicting any major impact in the future," Sharma noted.

He added that the global economic scenario was complex and impacted by a multitude of factors.

Merchandise shipments accounted for about 13% of India's exports at $246 billion to the US in 2010-11. Besides, 60% software exports worth $59 billion during that period were destined to the US.

Exports in the first six months of 2011 were measured at $11.85 billion.