The Hindu Business Line : Exporters prefer dollar invoicing: Report

EVEN as exporters cry hoarse over the appreciation of the rupee againstthe dollar that is bound to blunt their competitiveness if left uncorrected for long, this phenomenon has not really changed the invoicing pattern of Indian exports during 2002-03, says a new official study by the Commerce Ministry.

Sources in the Export Promotion Councils (EPCs), to which a questionnaire was forwarded by the Economic Division in the Commerce Ministry to elicit the views and concerns of exporters hit by rupee appreciation, told Business Line here that the report on export invoicing and appreciation of the rupee against the dollar, however, maintains, "We have to wait and see for any lag effect." The Economic Adviser in the Commerce Ministry, Dr H.A.C. Prasad, has prepared the report, the sources added.

What is particularly important to note, the report said, is that, sectorally, in leather, carpets and even engineering goods invoicing in other currencies is `significant'. It was also found that Indian exporters still have little leeway to set the terms of currencies, while in the case of small and medium exporters, enough awareness about the issue and instruments, such as hedging, are woefully absent.

Some crucial policy implications that supervened in the context of the present study include the importance of hedging, further cut in import duty, adequate export financing, modifications in the export risk coverage scheme, provision of timely information and allowing rupee invoicing.

Studying the behaviour pattern of exports through structured questionnaire and holding interactive meetings with exporters, the report attempted two different methods to analyse the issue. In the case of the first method, raw data received form the exporters of different sectors were analysed threadbare. As per this method, 88.43 per cent of exports were invoiced in terms of dollar, 5.56 per cent in terms of the euro and 1.76 per cent in terms of currency other than dollar and euro in 2002-03.

In contrast, in 2001-02, 90 per cent were invoiced in dollars, 2.51 per cent in terms of euro and 2 per cent in terms of currency other than dollar and euro. In 2000-01, 90 per cent were invoiced in dollars, 1.9 per cent were invoiced in terms of euro and 2.59 per cent in terms of currency other than dollar and euro, the report said.

In the case of the second method, total exports were divided into 13 broad categories such as agricultural and allied, chemical and related, electronic, engineering and an attempt was made to match the share of each broad sector in the sample data with the percentage share of each sector to India's total merchandise exports in 2002-03.

As per this formula, the report found as much as 86 per cent of the exports were invoiced in terms of dollar, 6 per cent in terms of euro and 5 per cent in terms of currency other than dollar and euro in 2002-03. In 2001-02, 86 per cent were invoiced in dollars, 4 per cent in terms of euro and 3 per cent in terms of currency other than dollar and euro. In 2000-01, 86 per cent were invoiced in dollars, 3 per cent were invoiced in terms of euro and 4 per cent in terms of currency other than dollar and euro. Thus, dollar continues to hold pre-eminent choice among exporters in terms of invoicing, even as the rupee has been appreciating slowly during this period.

Some important features in the context of the present study, the report said, include the appreciation of the currencies being a general development and nothing peculiar to the rupee, relative appreciation of the rupee not being high (when compared with some major countries such as French franc, German mark, Italian lira), currencies of India's immediate competitors remaining unchanged due to their currencies being pegged to the dollar and depreciation of the rupee mainly against the Euro in the same period.

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