Government keeping close watch on rupee movement: Nirmala Sitharaman

New Delhi: The government on September 10 said it is keeping a close watch on the rupee movement and its impact on the country's trade. The rupee depreciation has a favourable bearing on exports but at the same time it pushes up import bill, which can widen trade deficit.

"The currency market and its volatility is something on which there is no point speculating (but) we will keep a close watch of course and see how it is going to move and how that is going to have an impact on us (trade)...we will be watchful," Commerce and Industry Minister Nirmala Sitharaman told reporters here.

The domestic currency has depreciated about 7 per cent since April. It is hovering at around 66.5 against the US dollar. Hit by global slowdown, India's exports contracted for the eighth straight month by 10.3 per cent in July to USD 23.13 billion, pushing the trade deficit to USD 12.81 billion. The minister said the global demand is not rising and it is impacting India's exports.

"All over the world there is a depression of demand and when there is no demand rising, exports cannot grow, give whatever you want...falling demand all over is reason why exports are falling," she said.

She added that along with incentives to exporters, global demand would have to pick up in order to boost the country's exports. Replying question on e-commerce, she said the ministry has sent reminders to states on the issue. The ministry is discussing with the states on the FDI in e-commerce issue.

In a recent meeting, states have suggested that the interest of small retailers and consumers should be protected while promoting foreign direct investment in retail and e-commerce. The states were asked to give their written comments on the issue.

"Many of them (states) have come back, some of them have not. We have sent reminders. The moment every state or at least most of them given us (their comments), we will consolidate and move forward," Sitharaman added.

On Prime Minister's new campaign 'Start-up India; Stand up India', she said the ministry will closely following and working with banks to assure that start-ups do not have to run for money. The ministry is working on a framework for start-ups to encourage them and boost job creation.

On how China's economic slowdown can become an opportunity for Indian industry, the minister said many small producers depend on raw materials coming from China. They would be able to get benefited, she said adding "but we will have to be cautious. Not just raw material, finished goods too can come cheap (from there). "When finished goods come cheap it take away your jobs, they end up closing some of your production units, so you have to be very careful," she added.