Thiruvananthapuram

A package of Rs 1,400 crore has been worked out, which includes reduction in interest rates in pre- and post-shipment credit and increased drawback rate applicable to nine sectors in the traditional exporting sectors such as leather, textiles, handicrafts and engineering. Rates of Duty Entitlement Passbook (DEPB) have also been enhanced. However, this may not solve the main issue. The best way to sustain exports would be to make exports competitive through non-exchange rate factors.

The industry must develop a vision plan by taking various factors into consideration.

China in spite of its cost advantages is continuing with large-scale, cost-effective production.

The ill-effects of a rising rupee can be countered better by improving the logistics — ports and roads — rather than giving tax concessions.

T. S. Sundareswaran,

New Delhi

The move by the Ministry failed to please most of the firms as the benefits are only for certain industries.

While only a few were able to sustain the impact of rupee appreciation, the delay in announcing the relief policy — Rs 1,400 crore worth of sops — would not benefit a majority of SME (small and medium enterprise) exporters, as it can cushion only a limited downside.

While the nine identified sectors in the SME space, including textiles, toys and readymade goods, will now enjoy lower interest rates on pre-shipment credit for 180 days and post-shipment credit for 90 days, the following questions are raised by the exporters:

What about exporters who have commitment beyond 180 days?

What about those exporters who require credit between 90 and 180 days?

While the interest rates have soared by over 4 per cent in the past 6-9 months, the relief of just 2 per cent, that too, only by state-owned banks (leaving exporters who bank with private and foreign banks outside the ambit), only suggest that the policy requires a re-look from the Government.

Pulkit Soni, Indore

The main reason for the rupee’s appreciation is the continuous foreign-exchange inflows reflecting the country’s attractiveness to foreign investors. While the inflow is unlikely to slacken, it has been posing problems for the exporters.

Policymakers cannot ignore the problems of exporters although exports account only for a relatively small share of the GDP.

Given the limited extent to which the RBI can intervene in the foreign-exchange market, policymakers can stem rupee appreciation substantially by easing limits on domestic firms’ overseas investments or restricting inflows.

Though the euro and certain other currencies have emerged as alternative currencies, still the dollar’s dominance continues. Exporters certainly need to de-risk/minimise currency-related risks by invoicing in various major currencies.

As India slowly gets more and more integrated with other major economies of the world, this sort of swings are bound to occur.

While the issue has attracted exporters’ ire this time, next time it could be importers. Though a major part of the responsibility lies with the Government, various industry bodies also must counsel their members and help them face the situation.

Krithivasan, e-mail

The appreciation of the rupee has impacted the IT, hosiery and garment manufacturing companies that have significant export potential.

Though the Government has announced a relief package to help exporters, the issue needs to be examined, and the trend arrested.

T. R. Anandan, Coimbatore

More Stories on : Exports & Imports | Forex | Sticklish Issues

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page