The Hindu Business Line : Exporters may not reap benefits from falling rupee

Kolkata, Sept. 30 Medium and large exporters will not benefit much from a depreciating rupee, Mr Rakesh Shah, Chairman, Engineering Export Promotion Council (EEPC), said here on Tuesday.

Addressing newspersons at a press conference on the India Engineering Exhibition held in Kuala Lumpur recently, Mr Shah said, “Exporters have not been able to reap the benefits of the current fall in the rupee against the dollar, because most of them had hedged nearly 30-35 per cent of their contracts in futures during April-May on indications of a further strengthening of the rupee.”

Earlier in the year, the Centre had indicated that the rupee would appreciate further to Rs 35 to a dollar when its value was Rs 37 to a dollar, he pointed out.

“Most exporters are committed to an exchange rate, hedged at a forward premium, anywhere between Rs 39 and Rs 42 a dollar till February-March next year,” he said, adding that exporters would stand to lose over 10 per cent of extra earnings for not being able to avail themselves of the benefit.

He said that India’s trade with ASEAN countries such as Malaysia, Indonesia, Thailand and Singapore would go up significantly after the signing of the Free Trade Agreement between India and ASEAN expected by the year-end.

US crisis

He added that the financial crisis in the US may also shift a part of India’s exports to ASEAN. India’s trade with Malaysia is expected to double in another three to five years, from $747 million in 2007-08.

Nearly 169 Indian companies attended the India Engineering Expo. Mr Shah said the next expo would be held at Shanghai between November 4 and 8.

Regarding VAT refunds by different States, Mr Shah said, while Punjab and Andhra Pradesh were regular in refunds, West Bengal had not refunded sizable amounts even after repeated submission of the due list to the authorities concerned.

“Our proposal of deducting the overdue amount from the State’s Plan allocation and handing it over directly by the Centre has been taken up by the 13th Finance Commission,” he said. An estimated Rs 100 crore of refund is still pending with West Bengal, he added.