Online edition of India's National Newspaper
Friday, Oct 12, 2007
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Online edition of India's National Newspaper Friday, Oct 12, 2007 ePaper |
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Tamil Nadu
CHENNAI: Director-General of Foreign Trade R. S. Gujral on Thursday urged Indian exporters to adopt hedging, cut down production costs and create a niche product to tackle the strong rupee that has eroded the industry’s competitiveness. Addressing members of the Federation of Indian Export Organisations at an ‘open house meet,’ he said: “It is easy to give advice. But learn to adjust and adjust exceptionally fast, while it hurts. It is a reality that the economy is growing at 9 per cent a year. The strong inflow of dollars, coupled with a cut in the interest rate in the U.S., will make the rupee stronger and result in more inflow of dollars.” Pointing out that the Reserve Bank also had limits in trying to sterilise the rupee, Mr. Gujral asked small and medium enterprises to go in for hedging in future contracts to minimise losses, and focus on new markets. “Ultimately, it boils down to competitiveness.” Pricing dilemmaFIEO managing committee member M. Rafeeque Ahmed said the members were unable to increase prices in the international market, as India was treated as a minority partner. The buyers were ready to source the same products from different countries at a lower rate. Mr. Gujral urged the FIEO to set up a nodal cell to study the countervailing and anti- dumping measures of competing countries and the subsidies they offered the exporters. “Come out with out-of-the-box measures or schemes to provide a cushion in the adversity of the strengthening of the rupee. We will discuss these measures, or schemes, in the next two months prior to the announcement of the Union Budget.” The Commerce Ministry had urged the Finance Ministry and the RBI to lower the interest rate for exporters further so that the finances would be made available to them at international rates. Besides, the Finance Ministry had been urged to exempt exporters from service tax under 15 categories. “We expect positive results in the next few weeks,” he said. Dollar contractsFIEO vice-president and chairman (southern region) A. Sakthivel said: “The Indian textiles industry is in turmoil as we are at the mercy of international buyers. Due to the appreciation of the rupee, we are finding it extremely difficult to cut costs and increase production. We can increase the price only on the long-standing relationship we have with the buyers. Contracts can be signed only in dollars, and even European dealers are insisting on dollar contracts.”
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