Strong Re emerges as top impediment for exporters

A robust rupee has emerged as the most crucial impediment for 91 per cent of the country's exporters and outlook for the next six months does not look bright, a FICCI survey has said.

The survey conducted in the first quarter of 2007-08 revealed that for 91 per cent of respondents from 286 companies across various industry sectors, appreciating rupee was the main impediment to business performance.

In the last survey conducted by the Chamber in the last quarter of 2006-07, 75 per cent of exporters regarded currency appreciation as the primary risk factor.

It showed that the new situation arising out of dollar depreciation against rupee is forcing exporters to improve business in other currencies and to establish protective clauses in their contracts. "The concern is widespread amongst small, medium and large companies alike. The members of the exporting community have indicated that they are now taking steps to fortify their defenses," a FICCI statement said.

It said exporters are using mechanisms such as forward contracts, shifting to other currencies and establishing protective clauses in their newly set contracts.

"Exporting more to regions like the Middle East and the European Union, a strategic move to partially nullify the impact of the strengthening rupee vis-a-vis the US dollar, is also being resorted to by some exporters," the survey said.

Exporters saw rising prices of raw materials a major constraint in staying competitive at the global level. The results of the present survey showed that nearly three- fourths of the respondents have been hit due to the rising cost of raw materials.