NEW DELHI: The Indian currency has appreciated by 3.7 per cent against the Chinese Renminbi since February, resulting in surge in cheaper imports from China.
According to SBI's research report, appreciation of the rupee against the Renminbi has enabled Indian importers to purchase larger quantity of goods at lower prices and if the firming trend continues, it will make goods from China even cheaper.
"If this trend of rupee appreciation continues, thereby making goods from China cheaper, our imports from China could very well exceed the level of USD 61.30 billion attained in 2016-17," the report noted adding that it can adversely impact the production of domestic industries.
The report further said with trade deficit with China constituting 48 per cent of the overall trade deficit in 2016 -17, this is indeed a matter of serious concern for policy makers.
India runs a trade deficit with China which has increased significantly over the years. Trade deficit has risen to USD 51.1 billion in 2016-17 compared to USD 19.26 billion in 2009 -10.