Cautioning that exports this year may fall below USD 300 billion, Associated Chambers of Commerce and Industry of India (Assocham) on Tuesday pitched for sops to labour-intensive sectors and stated that inflation and high interest rates are making the country’s exports uncompetitive.

“We would be lucky, if we are able to reach the level of the previous year at USD 304 billion. Exports might even decelerate well below USD 300 billion,” the chamber said in a study.

The exports sector should be given maximum incentives, if we have to sustain jobs particularly in labour-oriented sectors like gems and jewellery, handicrafts, leather and carpets, it added. Besides, the rate of export credit should be reduced significantly, the study said.

The study also added that while the rupee has fallen over 25 per cent over the last one year, inflation based on the wholesale price index remained around eight per cent. In July, the inflation based on the wholesale price index was at 6.8 per cent.

Therefore, high raw-material cost and expensive credit have affected exports sector and made exportable products ’uncompetitive’, the study said.

These factors have made it difficult for the country to achieve the target of USD 350 billion in the current fiscal, it added.

Assocham said the government needs to do a reality check along with exporters and set realistic targets.

While exports registered a meagre growth of 3.2 per cent in April this year, the situation worsened in May, June and July registering a decline of 4.1 per cent, 5.4 per cent and 14.8 per cent, respectively.

During 2011-12, exports grew 21 per cent at USD 303.7 billion over the previous year. As against earlier projections, the economic situation in major markets including the US and Europe have not improved, the study said.

According to the Assocham study, the government’s target of achieving exports of USD 500 billion is unlikely to be achieved and that the Commerce Ministry needs to rework the strategy paper it had released last year.

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