Namrata Kath Hazarika | 30 Jun, 2012
Indian exporters are unable to reap much benefit from the
sliding rupee as many importers are asking for potential price discounts and
demanding to pass on the rupee depreciation benefit to them, said industry
"The rupee fall did not benefit us much as the buyers are demanding
discounts. They (importers) are creating problems such as putting penalties on
delayed shipments and creating unnecessary quality issues to get their share of
the rupee fall," said Arvind Vadhera, Chairman, Export Promotion Council
for Handicrafts (EPCH).
He added that the recession has pushed things further and has hurt their
business growth and profit margins.
Also, D. K. Nair, Secetary General, Confederation of Indian Textile Industry
(CITI) said rupee depreciation is by and large helpful to the textiles and
clothing industry since nearly 40 percent of its production is exported and the
sector has a very limited import intensity.
But, the higher cost for imported raw material and capital goods is more than
compensated by the higher rupee realisation on their exports, he added.
"In fact, there are reports that the importers are asking the exporters to
pass on the rupee depreciation benefit to them in view of the global economic
slowdown," he said.
R Maitra, Executive Director, Engineering Export Promotion Council (EEPC) also
see eye to eye with other experts on the impact of sliding rupee.
He said, "While many feel that a falling rupee is good for their exports,
they are also worried about the increasing input cost, higher import prices and
also the price discounts that is being sought by their buyers."
The Council has undergone a survey recently on the ongoing rupee fall. "We
did a survey of our members and we are receiving mixed signals," he said.
"Further, since many are unable to project the value of the rupee more
than a couple of months, many units are not seeking contracts for more than six
months. This is not a good sign since engineering exporters work on long term
contract," Maitra told SME Times.
"As the rupee is dipping sharply, they are unable to even figure out at
what rates to hedge. Apart from this, the slackening demand in the global
markets remain an area of worry," he opined.
He further said that the sector is facing immense trouble as it has made
imports costlier at the moment.
"For import intensive sectors like the auto sector, there is a cost push
effect. This coupled with high interest rates is impacting investment which is
clearly showing in the falling investment rates over the last year,"