The Indo-US Business Confidence Index, carried out by the Indo-American Chamber of Commerce, has dipped to 217 at the end of 2007, compared to 219 in 2006 and the decline was attributed to deceleration in the growth of export of services from India due to appreciation of rupee and slowdown in the US economy, according to latest index released on Monday.
The Indo-American Chamber of Commerce had appointed ICRA Management Consulting Services to design and develop a Business Confidence Index that reflected Indo-US economic and business relations and captures the sentiments and perceptions of the business community.
Significantly, the merchandise trade (both imports and exports) from/to the US registered an increase with imports from the US going up by 35.49 per cent and exports up by 11.5 per cent in 2007 over the previous year.
However, export of services by the Indian MNCs to the US registered a fall of 12.3 per cent in value terms and has been the key contributor behind the marginal dip of the index.
"Significant appreciation of the rupee vis-à-vis greenback made services exports from India less competitive," IACC said in the survey.
Even as the macro environment was found favourable, select components of the index like FDI, remittances inflow from the US along with most bilateral trade numbers, either fell or were static.
The fall was mostly witnessed by firms belonging to financial services and IT fraternity, thereby providing credence to the fact that the sub-prime crisis did have some impact on the US financial sector which affected the performance of Indian software companies.
The increase in imports from the US was mostly due to enhanced market opportunities to the US exporters particularly in electronics, avionics, aerospace and life science space, the survey said.
"Increase in military equipment sale to India, including the recently concluded one billion dollar aircraft purchase deal between the Indian government and a US firm, also contributed to increase in imports from the US," it said.
Exports of jewellery, pearls and precious stones were the main components that enhanced India's exports to the US. The lone segment that showed declining trend in India's exports was apparel and accessories.
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