Strong yuan to aid Indian exports, not to hit inflows.

China's decision announced over the weekend to let the yuan appreciate further from levels established in July 2008 could boost Indian exports of a slew of goods including textiles and light engineering goods to other countries. India's exports grew a healthy 35 per cent in May, bearing out the revival after 13 months of negative growth, up to October 2009. A stronger yuan would also increase the capability of Chinese manufacturing units to import raw materials like iron ore from India and this would have to be addressed through necessary policy action, official sources say.

A clutch of Indian firms including public sector electrical equipment manufacturer Bhel could look forward to a reduced threat from Chinese companies in the local market. Of course, with the less-than-transparent pricing mechanism followed by the Chinese industry, how amenable China’s export prices would be to a marginal rise of yuan remains rather uncertain.

Source : Indian Express