The Hindu Business Line : Strong rupee is top concern for exporters: Survey

New Delhi, Sept. 23 The appreciation of the rupee has emerged as the top impediment for exporters, affecting 91 per cent of them, according to a FICCI survey.

The number of exporters who thought currency appreciation as risk factor was 75 per cent in the last survey done by the chamber in the last quarter of 2006-07.

It added that the outlook for the next six months also does not look too bright.

The survey was conducted in the first quarter of 2007-08 and 286 companies across sectors participated in it.

It showed that the new situation arising out of dollar depreciation against rupee is forcing exporters to improve business in other currencies and to establish protective clauses in their new contracts.

“The concern is widespread among small, medium and large companies alike. The members of the exporting community have indicated that they are now taking steps to fortify their defences,” a statement from the chamber said.

“Some of the exporters are also restoring exports more to regions such as West Asia and the European Union to partially nullify the impact of the strengthening rupee vis-À-vis the US dollar,” the survey noted.

Further, exporters are seeing the rising prices of raw materials as a major constraint in staying competitive at the global level. The results of the survey showed that nearly three-fourths of the respondents have been hit due to the rising cost of raw materials.

Besides the appreciating rupee and the rising cost of raw materials, the other issues that figure in the top five impeding factors listed by the participating companies include increase in the oil prices (61 per cent), competitive environment (57 per cent) and rising cost of credit (52 per cent).

The results of the survey also show that while the exporters have welcomed the relief package announced by the Government, its impact on the export movement will not be pronounced because of the overriding influence of the rupee appreciation on overall earnings.

Several exporters have cited a reduction in the interest rate on pre-shipment credit as an important measure but said that the benefit would depend upon the banks and their implementation of this measure.

While 35 per cent of the participating companies reported that the current overall export conditions compared to the situation six months back are moderately to be substantially better, 54 per cent felt that overall export conditions have deteriorated.

Close to 40 per cent of the participating companies reported that export conditions at the industry level have deteriorated over the last six months, while nearly 37 per cent echoed a similar sentiment with regard to export conditions at the firm level.

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