Exports lose 10-12% edge: Ficci report

Rising Re to be blamed; exemption from service tax soon, says minister.

Exports in 11 sectors, including textiles, garments, and electronics, which account for 50 per cent of the country's total exports, have become less competitive by 10-12 per cent, according to a study by Ficci.

The study, submitted to the National Manufacturing Competitiveness Council (NMCC), attributed this to the rising rupee and hardening interest rates.

Readymade garments, which constitute 8.2 per cent of exports, lost price competitiveness by 8-15 per cent, the study says. Between April and May, the fall in exports was 20-50 per cent. The profit margins in the sector are likely to be hit by 2-5 per cent, the study notes.

Textile exports lost price competitiveness by 8-10 per cent and dipped by 25-40 per cent between April and May, the study said.

Chemicals, which contribute 8 per cent to the export basket, became costlier by 7-8 per cent due to the rising rupee. The export turnover of the sector during April-May could be down by 11-6 per cent, said the study.

Exports from the electronics sector during April-May are likely to fall by 25 per cent. The study noted that the cost of working capital increased by 2 per cent while the cost of production increased by up to 4 per cent. As a result, export margins for the sector have been hit by up to 8 per cent.

Minister of State for Commerce Jairam Ramesh said the textiles exporters had met Finance Minister P Chidambaram to express their concerns over this trend. The leather exporters would be doing the same next week, he added.