Credit rating agency CARE on Monday said India’s exports growth is likely to be hit in the coming months due to Eurozone crisis, reports PTI.

“Though India is primarily a domestic economy, India’s exports are positively linked to the global economic growth.

This is likely to adversely impact India’s export growth in the coming months,” CARE said in a report titled ‘Impact of Euro crisis and global slowdown on India’.

However, it said the growth will be only marginally affected by the slowdown in the euro region debt-stricken countries as our exposure is low.

“Average elasticity between India’s exports and the advanced nations or the euro region’s gross domestic product (GDP) is 0.18,” it said.

It is observed that in 2010-11, India’s exports to the European region and US moderated. However, the country’s exports to the Asian and the African region, which have a greater share in India’s exports, grew during this period, it said.

The report also said that the foreign direct investment (FDI) has not been significantly affected by the crisis while the foreign institutional investors (FIIs) are showing outflow in the last couple of months.

It, however, noted that the software services and other export oriented sectors would benefit from the rupee depreciation.

India’s earnings from the software sector have been increasing steadily over the years at 27.7%. In 2008-09, the world economic growth slowed to -0.7% but software services continued to increase, albeit at a slower rate, it said.

In the first 8 months of 2011, the rupee had been stable in the range of Rs44-45 per dollar. A depreciating trend became stark since August 2011.

The rupee has depreciated by 18% against the dollar and by around 9% against the euro since August 2011.

Source: moneylife.in