'40% exporters likely to close shops due to rising rupee'

Top Stories

»	49% Indian startups now from tier 2, 3 cities: Jitendra Singh
»	'India ranks 3rd in global startup ecosystem & number of unicorns'
»	Tripura exported over 9K tonnes of pineapples in 2 years
»	CPI inflation eases to 6.71% in July, IIP falls to 12.3%
»	Rupee depreciates 12 paise to close at 79.64 against US dollar

Namrata Kath Hazarika | 07 Apr, 2010
Around 40 percent exporters in the country are likely close down their businesses, if the government does not intervene and implement measures to control the appreciating rupee, said S.P Agarwal, President, Delhi Exporters Association (DEA).

Agarwal told SME Times, "Exporters will face losses, if the government is not intervening immediately. Around 40 percent exporters likely to close down their shops. The exports were picking in February after the 11-month down that we have witnessed recently. Now, the rupee appreciation has added a trouble."

After a 13-month rout since October 2008, exporters managed to return to growth from November 2009 due to demand flowing from the western countries once again.

"When the rupee was at Rs.47 or 49, the exporters have booked the orders, now they will be into tremendous loss. At present, exporters have only two options in front of them. First, export the products at a loss and do not export at all." he said in anguish.

He mentioned that if things are not brought under control, Indian exports will witness a severe downturn in near future. It is expected that the country might lose buyers who would start looking for better market for a reasonable rate.

".... we (exporters) will be in certain dilemma. Exports have been into tough conditions due to the impact of the global slowdown. Now, the rupee appreciation - which created dual problems for the exporters." he added.

Exporters have faced immense problems for the last two years such as falling sales, increasing input costs, slack in demand, and drying cash flows.

In this context, Agarwal commented, "If the government is not giving a fixed exchange rate that we have recommended or any other measures, our exports would probably go down further. The government needs to understand the requirement at present."

"Exporters are unable to decide at what exchange rate they would book their orders as the rupee is continuously appreciating. And, it would come down further against the dollar in the coming months," he added.

He urged the government to make a small modification by fixing the exchange rate, which will help Indian exporters in the long run.

"The constitution changes quickly in India then why not a small modification be implemented sooner by the government," he said.

Meanwhile, Salil Singhal, Chairman, CII National MSME Council and an exporter opined that the rupee appreciation usually hit hard the small exporters with a slight fluctuation. The small business firms face the trouble of rupee appreciation adversely.

He also said, "The rupee is expected to gain further against dollar in the near future, we should be prepared for that."

"Moreover, I do not think with the given economic policy by the government we can decide on fixed foreign exchange rate. I do not think it is possible in my understating. We will have to follow the international monetary rate." he added.

Exporters are expecting that the government should fix the exchange rate at Rs. 47 a dollar, which would be beneficial.

When asked whether India has to take a cue from China, he commented, "China does not have fixed foreign exchange rates. They (China) has a very good currency value mechanism. China's purpose is to keep their yuan at a very low rate. Yuan in last one to two years have appreciated against other currencies."

"India has to keep a balanced foreign exchange management policy, which will help exporters in long-term," Singhal added.

India's exports for fiscal ending March 31 are expected to drop to USD 160-165 billion from USD 185 billion in 2008-09.