Exporters feel heat as rupee stays firm

By IANS

Mumbai : As rupee stayed around nine-year highs against the dollar, India Inc made fresh pleas to the government to initiate urgent steps to reduce the impact on exporters especially after inflation dropped to five-year lows.


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As the annual rate of inflation, based on wholesale prices, fell to 3.32 percent for the week ended Sep 8 from 3.52 percent the week before, exporters urged the central bank to cut interests and the government to unveil a bailout package.

The government should immediately implement the package announced for exporters in June this year,” said G.K. Gupta, President of the Federation of Indian Export Organisations (FIEO), an umbrella organisation for overseas trading companies.

“Most of announcements simply remain on paper and have not flown to exporters,” Gupta said, as the rupee closed Friday at 39.8825 to a dollar, barely changing from the previous day’s rate.

Exporters said the cut in US Federal rate by 50 basis points without a reduction in the interest rate in India was resulting in the pouring of funds into India, which was fanning the rise in the value of the Indian currency.

They said an immediate intervention by the Reserve Bank of India (RBI) with a cut in interest rate would arrest a further problem and not only help banks to lower their prime lending rates but also bring down cost of export credit.

“The increase in the prime lending rate by about 2-2.5 percent has offset the advantage accrued to the exporting community on account of extension of pre-shipment and post shipment credit at 4.5 percent below this rate,” Gupta said.

According to the Federation of Indian Chambers of Commerce and Industry (FICCI), the feedback from exporters shows that their current order book position had weakened, compared with the situation six months back.

“As a result, the export performance of the country in the next six months would not show encouraging trend. In several segments of industry, exports have slowed down considerably resulting in significant losses to the exporters,” Ficci said.

The National Association of Software and Service Companies (Nasscom) asked the government to extend the tax benefits under the software technology park scheme for another 10 years to keep exporter sentiments positive.

“One step that will send a very positive signal to the industry and investors is the extension of tax incentives by 10 years under the Software Technology Park of India scheme,” the industry lobby said in a statement.

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