The Hindu : Tamil Nadu News : “Imaginative ways needed to deal with rising rupee”

Online edition of India's National Newspaper
Monday, Sep 10, 2007
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Tamil Nadu

Tamil Nadu

“Imaginative ways needed to deal with rising rupee”

N. Anand

CHENNAI: Indian exporters have to hit upon imaginative ways of dealing with the issue of the appreciation of the rupee against the dollar, as the Centre can help only to certain extent, Vinita Kumar, Economic Advisor, Union Ministry of Commerce, has said.

Recently, the Union Government came out with a relief package for the exporters, whose trade margins had shrunk in the last five months. The exporters claimed that they were yet to feel the impact of the relief package.

Talking to The Hindu on Friday, she said: “The rupee has started to find its real worth. It has been hovering around Rs. 40 a dollar. Only a few sectors have taken the beating. These sorts of problems have been there for long. But, the traders have to find some imaginative ways to come out of it. We can’t be providing help all the time. However, we are closely monitoring the situation.”

According to her, in the first four months of the current year, the sales had risen by 18 per cent in dollar terms as against 23 per cent in the previous year. In rupee terms, it had taken a beating. The growth is above the world’s average.

“Hence, we will wait and watch the situation for some more time and come out with a package, if needed, to reduce your hardship.”

Ms. Kumar was here to find out the impact of the rising rupee on the textile, leather and engineering sectors. She visited the India Shoes unit on Friday and interacted with members of the Federation of Indian Exporter Organisations. On Saturday, she visited the Hyundai car factory at Sriperumbudur.

“I came to Chennai since it is an important State for leather, automobile and textiles. This is not sector-specific or region-specific meeting. We have to make a beginning and are starting with Chennai. Please don’t read too much into this meeting. We have been conducting this sort of meeting periodically with industry representatives. The Director- General of Foreign Trade will interact with industry representatives in Andhra Pradesh and Karnataka in the next few days,” she said.

During the interaction with FIEO members, she asked why hedging could not be used as a mechanism to beat the rising rupee, or why exporters should not go in for bulk imports to cut cost. The traders said that hedging suited only big firms.

When exporters asked for a level playing field and for pushing some of the products into the negative list, she said: “The Centre can’t create a level playing field for everyone at all times. The manufacturers have to improve quality, increase production.”

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