Exporters want more, say package insufficient

New Delhi, July 22: Ahead of the Monetary Policy review on July 31, the industry today clamoured for more sops to counter the hit the exports have taken from the appreciating rupee and claimed that the Rs 1,400 crore package was not enough to provide succour to the small and medium exporters.

Industy Chamber Assocham recently carried out a study involving 400 small, medium and large enterprises and stated that 80 per cent of the respondents could not wet their appetite by the financial package.

The Chamber said unabated rising transactions costs and lack of availability of well-equipped infrastructure have in recent past threatened the prospects of exports registering an increase.

The government had given a Rs 800 crore relief to the exporting community by way of subvention of interest rates and another Rs 600 crore by way of relief in duty drawback.

The industry welcomed this, but stated that it was not adequate to meet the loss it has incurred due to an almost secular rise of the rupee.

The Reserve Bank of India is to review its Monetary Policy stance on July 31 amid speculation that it would maintain a status quo on interest rates.

However, the rising prices of global crude oil is putting pressure on the burgeoning subsidy bill with the government having little choice except to increase the prices of petrol and diesel.

If prices of petrol are increased, it would put further pressure on prices and upset the apple-cart of the falling inflationary graph.

The silver lining, however, is a statement by Finance Minister P Chidambaram that monetary policy will remain tight.

India's export growth in 2005-06 over 2004-05 in terms of rupee was 21.60 per cent whereas in Dollar it was 23.41 per cent. Exports during May 2007 were valued at 11,861.28 million dollars, which was 18.07 per cent higher than the level of 10,045.99 million dollars during the same time a year ago.

In rupee terms, exports touched Rs 48371.98 crore, which was 6.04 per cent higher than the value of exports during May 2006.

The difference in the growth percentage of exports in dollar term and Rupee term suggests that exporters are losing on their realisations.

India's major export destinations are the US, the UAE, Europe, Hong Kong and Singapore. The rupee had witnessed a sharp appreciation with currencies of its major export destinations and competing countries currencies. The appreciation is high in case of Japanese Yen which is 10.33 per cent, followed by the American Dollar at 9.61 per cent, Hong Kong Dollar by nine per cent, Taiwan Dollar by 8.9 per cent, Indonesian rupiah by 8.45 per cent, Pakistani Rupee, Singapore Dollar by 7.6 per cent, Chinese Yuan by 5.7 per cent, Russian Rouble by 4.9 per cent and Euro by 4.12 per cent.

The chamber points out that the Rupee has depreciated against Brazil Real by 2.8 per cent and Thailand Baht by 3.5 per cent, but this makes no impact or difference to the Indian exporters. The study noted adding that the Asian countries will give stiffer competition in lieu of the Rupee appreciation.

Textiles, leather, Gems and Jewellery are already witnessing a slowdown on account of rupee appreciation. The Indian rupee has appreciated very high the currencies of these countries, making the Indian exports uncompetitive in the international market, said the study. Indian exports compete with that of Thailand, Indonesia, Malaysia, Pakistan and Bangladesh.

When compared with the US dollar among the competitors and major export destinations of India, rupee had shown the highest growth in appreciation taking away the export competitiveness, as the competitor's currencies have not appreciated to that extent, revealed the study.

There are signs of the rupee further strengthening and it will be a big concern for the SME segment of the Indian exporters, the study added.

The appreciating rupee is a matter of concern for 90 per cent of the exporters and the chamber said that it's appreciation with other currencies such as Asian currencies, Euro and Japanese Yen is also becoming a concern for competitiveness.

UNI