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Last updated: 18 Aug, 2015  

Yuan.9.Thmb.jpg Yuan devaluation: Time to act

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Bikky Khosla | 18 Aug, 2015
Exports fell for the eighth straight month by 10.3 percent in July to USD 23.13 billion, pushing the trade deficit to USD 12.81 billion. Sectors that suffered the brunt of this trade decline include petroleum products, leather and leather goods, marine products and chemicals. Contraction in overseas shipment for the first four months of the current fiscal stood at 15.04 percent. Over the months, global slowdown played a key role in pulling our exports down and concerns are now even deeper with China devaluing its currency by nearly 6 percent last week.

How yuan devaluation could affect our foreign trade? First, our exports - which are already under pressure with overseas shipments declining month after month - may suffer further as the weaker yuan is likely to make Chinese exports more competitive in the world markets. China is trying desperately to mop up its exports and this is going to make competition stiffer, particularly in sectors like machinery, auto-ancillary parts, and steel. In addition, with the yuan losing it value, Chinese consumers are more likely to turn toward locally made brands. This could affect India's exports to China which comprises mainly cotton, copper and chemicals. Second, if the yuan continues to lose its value faster than the rupee does, China may further dump goods into the Indian market.

Meanwhile, the Centre has assured the manufacturing community that it will take "every possible measure" to stop dumping of goods in order to safeguard the manufacturing interest. At the same time, I think the RBI must come forward with an action plan to withstand the pressure from China and save the rupee - which hit a fresh two-year low against the US dollar in trade on Monday - from further decline. In addition, the central bank should make no hesitance in cutting interest rates in the upcoming policy meet on September 29 or before that on the background of fall in annual wholesale inflation for July to a historic low of (-)4.05 percent. I think monetary easing is indispensable at this juncture.

There is a silver lining, however, amid woes. The rate of export decline is comparatively lower in July and this trend, along with rise in container traffic in first fortnight of August, renewal of GSP benefit for Indian exporters by the US, rise in manufacturing growth in June from 2.9 percent in 2014 to 4.6 percent and improved export performance by sectors like gems and jewellery, pharmaceutical, apparel, plastics and engineering brings some hope, but such respite will prove temporary unless adequate support is provided by the Centre during this difficult time.

I invite your opinions. Which industry do you belong to and what challenges are you facing?
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Yuan devaluation: Time to act
A V Chandran | Thu Aug 20 05:22:53 2015
Govt of India including RBI, Exim Bank, all banks of working group and Apex bodies of Exporters and Importers must review this critical situation of Trade Deficit towards Trade Surplus by virtue of improved mechanism on war footing. In order to boost continuous Trade Surplus, support of above Group is a must and this issue could be reviewed on monthly basis in order to pin point the problem area, in order to solve the problem area and pass resolution thereof.

It Affets Bed Sheets and Blanket Business
Kalpesh | Wed Aug 19 14:41:24 2015
Chinese export these items ( bed sheets and blankets ) at a cheaper rate and thus it is affecting . We are into manufacturing of bedsheets.

'MADE IN INDIA's under Threat !!
FAHAD AHSAN | Wed Aug 19 14:10:15 2015
I am from Leather Sector of INDIA, I think China's Devaluation poses equal threat to Indian economy as Federal Interest Rate Cut, which we cannot ignore. Europe Stagnant demand and Brazil's Declining economy hence devaluing Currency (by 50% YbY) is causing bigger threat to leather Industry. Europe being the Biggest Partner of India and Euro losing 22% in a Year, has completely washed out competitiveness in INDIAN VALUE ADDED GOODS (SHOE, GOODS etc..). Leather being small by product of Slaughtering Industry, also faces internal threat and declining Chinese economy (52% Meat Export Share to China). Meat Industry face stark threat of losing its position as top 3 meat exporting nations. Inadequate policy and pending Files on the business Policy threaten worsening of ECONOMY. BIHAR ELECTIONS MIGHT DICTATE A LOT OF THOSE HARD Decisions and October will be a month when Currency should be touching Rs. 68/US$, giving small benefit against CURRENCY WAR THAT THREATENS GLOBAL ECONOMY. GLOBAL DEPRESSION MIGHT NOT BE THERE TODAY, BUT INADEQUATE ECONOMIC DECISION DO THREATEN INDIA's Dream of MAKE IN INDIA program. MODI GOVT NEEDS TO ACT !!

How to increase sales from India to Europe
Bart Vandezande | Wed Aug 19 07:29:21 2015
Hello, I have a company in Belgium and am importer of steelsmith clamps made in India. one of the issues I'm facing is that suddenly fedex raised their tariffs times two for air transport. We used to import 4 boxes of total weight of around 80 kg but now with the price increase of fedex, I have difficulties to import from India. Does anyone know a non-expensive way to import from India? maybe as an idea: your chambers of commerce could negotiate tariffs with these transporters, so that you get a low freight cost from India to Europe. United the force is with you.

Sundaresan | Wed Aug 19 06:07:35 2015
I'm doing imports & exports business. I recently started this business. My main problem is bank is ready to support me.all along I have been working for somebody. After having worked for 35 yrs.I thought starting business will be better.I'm a B.Tech & Ms from UK. The ads. Regarding MSME, is very good, but when u go close then only u come to know. EVEN for such qualified people if it's difficult, how can common man can think of exports. I expect government to do something. Instead of giving free gifts to people,better give loan and create more entrepreneurs & create more employment.Also do some direct support to people.

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