The Hindu Business Line : Govt, software industry worried over rising rupee

"The fluctuation has been the highest in the last three months, which is a cause of concern," Mr Kiran Karnik, President, National Association of Software and Services Companies, said.

New Delhi May 9 The appreciation of the rupee has both the Union Government and the software industry worried.

Speaking on the sidelines of a press conference on Wednesday, the Union Commerce and Industry Minister, Mr Kamal Nath, said, "We have taken the issue up within the Government and also my Ministry talked with the Reserve Bank of India (RBI) and we are confident that all the necessary steps needed to arrest the rupee's gains against the dollar will be taken."

Mr Nath also said that he was hopeful that the export target of $160 billion for the current fiscal would be met despite the appreciation of the rupee. "The Indian industry in the last year has seen a lot of ups-and-downs and has overcome the hurdles well, so I am hopeful that the industry is resilient enough to deal with the issue also," Mr Nath said.

Fluctuation

The rupee has been steadily rising in recent months and hit a nine-year high of Rs 40.55 against the dollar on Monday and on Wednesday it closed at Rs 40.91/93.

Mr Kiran Karnik, President, National Association of Software and Services Companies (Nasscom), said that too much has happened too quickly, which is why the industry is concerned. "The fluctuation has been the highest in the last three months, which is a cause of concern," Mr Karnik said.

According to him since around two-thirds of the software exports are to the US and close to 70 per cent are dollar contracts, if the trend continues then companies might get affected in the long run.

He also added that in the short term the volume growth and top-line of companies might not be affected but if it continues for a long time, there might be a dip in the bottom line. "Most of the software companies hedge their dollar income in the short term, so they have some comfort level against the falling dollar value," Mr Karnik said.

He also said he wasn't too worried about wage rises in the sector. "I expect wage rise will begin to moderate to about 8 per cent from the current 15 per cent," he said.

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