"If the average exchange rate falls below Rs 40 to a dollar, the export growth rate in dollar terms will be negative in the current fiscal year," EEPC Chairman Rakesh Shah said in a statement.
Shah, who met Commerce and Industry Minister Kamal Nath on Wednesday seeking relief for exporters, said if the domestic currency hovers around Rs 40 to a dollar during the year, growth of engineering exports would stagnate at 25-26 billion dollars, indicating a zero growth.
Nath had said yesterday that his ministry would ask the Finance Ministry to notify service tax exemptions for exporters and increase duty drawback as well as DEPB rates to help traders tide over the crisis in the wake of the appreciation in the rupee value against the dollar.
Shah said the growth rate of 20 per cent in engineering goods is feasible only if the exchange rate is maintained at Rs 44 during 2007-08. "Engineering exports will then be around 32 billion dollar for the current year," Shah added.
The Council feels that the above targets may still be achieved if exemption of service tax is notified and VAT is refunded.
Engineering exports are the largest foreign exchange earners and account for 20 per cent of the country's total exports. Of India's total exports of 125 billion dollars for 2006-07, engineering exports stood at over 26 billion dollars.
