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Govt. should intervene to save exporters from losses
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Bikky Khosla | 30 Mar, 2010
Once again a volatile rupee threatens to take a toll on exporters. On Monday, India's currency touched a near 19-month high against the dollar at Rs 45.04 per dollar, recording a 13.4 percent rise over Rs 52.06 to a dollar in March 2009. Against the euro the rupee has appreciated 13.4 percent since November 2009. This appreciation is not good for the health of domestic industry as our competitiveness in global terms also takes a hit.
After 13 straight months of downturn, exports were returning to the positive growth trajectory since November 2009, but the appreciating rupee has again undermined the competitiveness of India's exports. I strongly believe that if the volatility of the rupee vis-a-vis the dollar persists, exporters will be at the losing end, unable to plan ahead or price their products properly.
Even though the demand from the Western markets are gradually increasing, exporters are unable to cash in on this increase in demand and stand to lose to countries like China, who has not allowed its currency to appreciate in the recent months.
While experts are keeping their fingers crossed and hoping that appreciation does not continue, they feel that the Reserve Bank of India is looking at rupee appreciation as a measure of controlling inflation. And while worried exporters are asking the government for a fund to compensate them for the losses, wherein exporters have suggested that the dollar and euro could be pegged at a particular rate and an exporter be paid the difference any time the rupee appreciates beyond this level. I feel the same will not be a feasible option.
Having said that, if the rupee continues at this level or keeps going up, then the government or the RBI will ultimately have to think of ways to intervene in order to save exporters from incurring huge loses. Till then we are probably helpless!
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Use IT, Reduce Costs and Become Competitive
Bhuvnesh Chaturvedi | Wed Apr 14 14:51:58 2010
Less than 1% exporters use IT/ ERP Solutions. Those who do use it for accounting, payroll and inventory only. By using IT in all business functions they can reduce costs by 10 to 25%. Also they become compliant to quality standards. Exporters can use full feature 40 module ERP available Free of Cost at http://ems.lifeforeveryone.com.
Why our exports may be falling ....
surajitray.com | Thu Apr 1 14:09:22 2010
To squarely blame rupee fluctuations for losses is a age old misconception. Our export losses are the result of a large number of factors the least of which is the rupee fluctuation. We suffer from erratic time frames for supply, we cannot match stipulated quality standards and most importantly our manufacturing sector, be it textile(the major losers during the downturn) or otherwise is prone to making erroneous estimates of capabilities and time frames. It is one thing to know your quality and time frame for the delivery and then quote the same. It is quite a different story when we start quoting small time frames and high qualities - and then deliver not even 50% of our promised levels. We as a exporting country have a bad reputation among overseas buyers - and changing that will be the key to robust exports. We have to weed out (and prosecute) exporters who have pending complaints against them from foreign buyers. Our image needs a massive cleaning up !
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Re: Why our exports may be falling ....
pmelwani2@yahoo.com | Wed Apr 14 18:04:05 2010
Every exporter, manufacturer should have on their desk the following caption: MADE IN INDIA WITH PRIDE. Only when we can exude this sense of belonging then we can conquer the world. The mere mentioning of Made in Germany or Japan elicits total confidence. Yet, we, Indians, are not any lesser. But, while we harbour this chronic syndrome of complacency, subservience and apathy, we will not transcend the wall that separates mistrust from trust. We have grown too accustomed to our local market and failed to recognize that international expectations are more exigent. If we are to succeed in capturing the global market and instill trust and reliability a very strict framework must be in place that will ensure all goods manufactured and exported must conform to the buyers' specs. All goods that do not meet the reqirements will not be exported. Giving this assurance to the importers will provide the exporters with an incentive to clean up their act. Then perhaps, MADE IN INDIA may become synonymous with QUALITY.
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GOVT SHOULD INTERVENE
ram | Wed Mar 31 17:11:42 2010
Look at the brighter side.Lots of tourist come to India and spend lots of money when they get better value.That is helping local economy too
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Re: GOVT SHOULD INTERVENE
Ac - A MBA Student | Thu Apr 1 08:51:52 2010
I would like to know one thing, that what if the money depreciates against dollar and reaches to a level of 51/- Rs
What would be the impact on quantity level exported, as in Demand, will it decrease...
Cos now people importing from India, would pay more money in order to get the same quanity as compare to what they were getting when money was appreciating against dollar...
If not, why not???
Now Mr. Ram, coming back to your point, India's GDP is big time effected by cost incurred on importing oil.
If govt intervenes, by depreciating money against dollar, this would result in more losses to oil companies and oil/fuel cost will rise, which would further lead to INFLATION
Plus I believe, every country wants it's currency to be stronger thn to the currency of other countries
Govt should intervene, but by giving some sops for eg. reduce tax etc etc (helping thm in reducing exporters costs)
Please discuss further...
your advice/suggestions/points & please correct me if I am wrong
All of the above will be highly treasured
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GOVT SHOULD INTERVENE TO SAVE EXPORTERS FROM LOSSES.
tapas sen | Wed Mar 31 04:48:57 2010
My question is why?Should any business entreprise not be ready to face all eventualities internal or external & come up there own to face the global scenario or should they depend on Govt whenever any crises arises?Are we parting with the profits when we make the same other than paying taxes,which even are paid unwillingly after taking care of maximum benefits which can be derived & if so why govt should bail them out when they are in crisis, out of the money from common mans pocket.This is a shame on Indian Industry that it still is dependent on govt when it comes to any crisis may be created due to policy changes at national or international level instead of trying to stand of it's own.May GOD & GOVT save these entreprenours to last long.
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Re: GOVT SHOULD INTERVENE TO SAVE EXPORTERS FROM LOSSES.
Niraj Mithani | Thu Apr 1 03:01:21 2010
The congress govt has always been a speculation promoting govt. They are not worried abt Exporters losses but the profits made due to speculations.
The thing to remember here is that we boast of Excess Foreign Exchange reserves, but this reserves are in form of Foreign investments and not earning s out of Exports.
While china truly has real reserves in terms of income they reached this stage due to 25 years of constant Dollar - Yuan ratio.
Even the FII are not benefited who are investing heavy as they lose abt 5% in exchange fluctuation when they bring in the money and 5% at the time of taking back the investment, Apart form paying 30% taxes on short terms gains.
It is such a bad policy for foreign investors and Indian exporters both.
While the FII manage 10-15% profits the Indian exporters losses from 4-5% and also losses export orders to competitor countries like China due to prices going high on account of Rupee appreciation.
One thing i will like to point out is that even the rates mentioned in the Shipping bill is always on higher side, while the Govt ports expect the Exporter to bring in more dollar, RBI on Govt's direction does not intervene due to FII investment coming through.
Finally when Rupee appreciates Infaltion decreases but that aint true as prices of imported products dont come down. In fact dumpers of goods like china rise their price of exports so that the price of a particular product in India remains stable and it is they who get benefited. Dirty Politics
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Stop crying currency fluctuation
siddharth nahata | Wed Mar 31 04:26:52 2010
till when will be dependent on currency fluctuation,
when will we grow up and become dependent on our competitiveness.
LG & Samsung are cheap buts till sony is considered to be best and is highly sought after not because they have cheap mfg base or xyz or this stupid point curreny rates but because of innovation and their compettiveness ..there are millions of examples like this...so exporter grow up rather than just crying
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Re: Stop crying currency fluctuation
Niraj Mithani | Thu Apr 1 03:06:00 2010
My dear friend to achieve that level first the country must earn the label of Developed nation and not developing nation.
japan is a developed nation while Korea like India ( though better than India in terms of cleanliness & Infrastructure ) is a developing nation.
Also lobbying of certain Govts of developing nation is better than Indias like china bcos they worry abt their ppl unlike Indian politicians who attend meetings for their commissions from MNC's of the west.
So my dear friend its you who needs to get facts straight
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Rupee appreciation
Brent Devero AUSTRALIA | Wed Mar 31 01:49:04 2010
Lately USA is building a closer relationship with India because it is a democracy, and believes in free trade, China is becoming a facist menace with no game rules. Business people get locked up and your ideas are stolen. Let your currency float I would rather do business in India anyday.
Businessmen must learn
Mohan | Wed Mar 31 00:42:26 2010
Indian businessmen have been known to survive only on monopoly and dominance. They simply cannot compete on a level playing field! First, they should set their house in order, follow good business practices and improve management skills. Having been associated with several companies during the last 30 years of my service in the industry, I can vouchsafe that businessmen pay greater attention towards money than on their business.
NO
Centaur | Tue Mar 30 21:21:00 2010
if the rupees is allowed to be freely covertible then it will automatically collapse to the 50-52 levels but the danger of that is it might appreciate if our growth rates reach 9-11% and US remains stagnant! Government intervention can only help a point. Business rules govern that exporters will have to work at lower margins under the current circumstances and getting a market share at loss is not a prudent long term strategy. Hedging is an important tool for the exporters and all known exporters do it wisely! the argument that the government should come to rescue is a lame one! The exporters should look at opportunities and convert them into larger orders whereever possible to make up the numbers. Like the Chinese we need play the numbers game smartly!
NO
SHK | Tue Mar 30 20:16:37 2010
As an Indian born and raised in the US, my company (~2.6M annual revenue) has attempted on multiple occassions to import from India and support Indian companies. It is without doubt that we have fell hard on our faces many times. We have switched to Chinese companies now, given that Indian exporters tend be highly unethical and deceiving in their business deals. We have received damaged, incorrect and (at times) no product after fund wire transfer. It is unbelievable. And when we requested that funds be returned, we were given argumentative and challenging behavior. It is truly disappointing when an Indian company deceives another one, especially when we have no reason to go with an Indian company over others in this highly competitive global market.
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Re: NO
Ac. | Tue Mar 30 20:42:06 2010
Mr. SHK
With due respect, I believe targeting the whole exporters segment based on your experience with one or two exporter is irrational. There have been same instances with Indian exporters as well.
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Re: NO
IndianRK | Wed Mar 31 04:50:32 2010
i had a brief touch with exporters and customs in late 80's, it is a big nexus and fraud game. Corruption is the root cause. Better exporters/ industry join hands and fight corruption in India which is making production expensive and unethical rules play, taxes be low but well enforced.
How else do chinese goods reach India costlier than local manufacture. Not to talk of exports, i hav seen shoddy products from india in US shops, buy once and forget Indian goods for ever.
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Re: NO
Niraj Mithani | Thu Apr 1 03:12:42 2010
Its not the case with every Indian Exporter.Chinese Exporters are best known to adopt unethical practises like exporting things on much lower grades than the actual sample and specification. But still the world accepts their very dictative payment terms and still dont complain abt bad goods.Best example of this are Chemicals ,heavy Machinery and automobiles and automobile components from China
Products like toys and food stuffs are already banned in many countries as they are a huge risk to Human Health.
Sorry i feel their is a lot of hear say in your story my friend.
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NO
Rahul Thadani | Tue Mar 30 16:09:23 2010
The govt has taken enough measures and has ensured that concerns can hedge rupee against dollar . Now isnt it the responsibility of an individual exporter to research and take appropriate measures to safe guard himself against the fluctuation in currency ?
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Re: NO
Vijayakumar samuel | Tue Mar 30 16:18:10 2010
Our present Government is a puppet of the US and World Bank,IMF and such agencies which is favoring Imports to appease the Governments,where as China is highly nationalistic and patriotic so inspite of excessive Dollar stocks with it the government has not allowed wide fluctuations.This is more of Political will and action rather than economics.
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Re: Re: NO
priyash bhargava | Wed Mar 31 04:28:36 2010
i agree to Mr. Vijay kumar just because of this our government policy we manufactures are so much depressed. Our governement is happy to see FII"s investment in shares market . They don't have an idea how we are fighting with these Chinese . Currently the steel prices shoots up like any thing . But the governemnt have now control on prices ,
This kind of attitude so much fucked that i can't explain it.
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Re: Re: NO
Davis | Wed Apr 7 06:57:37 2010
I am importing engg materials from India as well as China. initialy chinese will be cheaper, but any metal price increase is reflected in their prices. They never give stable prices. Where as Indian prices are valid for longer period. I have the example of the recent steel price increase; Chinese steel items prices are being increased day by day. It is all very complex my friends. Concentrate on your business, improve qualities, practice business ethics & innovate with present day advances. You can succeed.
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