Indian exports not to have major impact for the fall in Yen rates : FIEO

NEW DELHI : The recent depreciation seen in Japanese yen is not expected to impact India’s exports to that country as they are not competing with domestic manufacturers, but it could jack up Indian imports of electronics, machinery and auto components, according to Federation of Indian Export Organisations.

“India’s exports to Japan are largely of goods like apparel and marine products that they (Japanese companies) do not produce locally so these products are not competing with the domestic manufacturers. So despite the depreciation there would not be any impact even though these products may get costly for consumers there,” Director General and Chief Executive Officer of FIEO Ajai Sahai said.

The yen dropped to its lowest level in 34 years early Wednesday, trading near 152 to the dollar. The fresh round of depreciation of yen has been sparked off by the Bank of Japan ending its negative interest rate policy.

Sahai, however, said that because of the depreciating yen Japanese exports will get cheaper and more competitive.

The depreciating yen might see Indian companies increasing their imports of electronics, machinery and auto components from Japan so there could be some shift away from other sources, he said.

Chairman of the Engineering Export Promotion Council EEPC Chairman Arun Kumar Garodia also said that there would be no impact on engineering sector exports to Japan due to yen depreciation.

He said the border impact of the recent developments in Japan would not be felt on larger exports as most of Indian exports are invoices in dollars and euros. Garodia said that though the exports are immune from recent developments in Japan, it will hurt some of the bigger Indian companies who have borrowed abroad in yen.

Within the engineering sector, which accounts for close to 25% of exports, India exported $ 322.24 million worth of electrical machinery in the last financial year. Exports of iron and steel stood at $268.21 million and aluminium at $291.59 million.

In 2022-2023, Japan‘s bilateral trade with India was $21.96 billion, with Japan exporting $16.49 billion and India importing $5.46 billion.

India’s main exports to Japan also include refined petroleum ($379 million), Crustaceans ($332 million), chemicals ($734 million), iron and steel ($268 million), other machinery ($ 430.7 million) and vehicles ($405.14 million).

India’s imports from Japan are machinery ($2.8 billion), metals (2.1 billion), electrical machinery ($ 1.7 billion) and iron and steel ($1.3 billion).

India and Japan also have a Comprehensive Economic Partnership Agreement (CEPA) between them which was signed. India is seeking a review of some elements of the agreement as it feels that the pact has benefitted Japan more than India.