Manufacturing units hit by rising rupee, Chinese imports

Chennai, Oct 9 Larsen & Toubro feels that the rupee appreciation combined with the Chinese artificially locking in their currency is affecting some of the manufacturing units in the company. It has apprised the Centre of this and wants it to act before Indian manufacturing is badly affected.

“My appeal to the Government is impose 30 per cent anti-dumping duty on China until such time they float the currency. The day they float the currency, withdraw it (the anti-dumping duty),” Mr A.M. Naik, Chairman and Managing Director, Larsen & Toubro Ltd, told here on Monday.

L&T has a number of manufacturing units that are affected by imports from China. They are small units and hence overall the company is not affected much. However, the units – producing plastic and rubber machinery, valves and medical equipment – in Tamil Nadu and Karnataka have over 2,000 employees and get almost half their turnover from exports.

Artificially locked in

At its weakest, the rupee was Rs 48 to a dollar and at its strongest, at Rs 39.50, an over 20 per cent appreciation of the rupee. This itself was a major impact on exports. While the rupee was free floating, the Chinese currency yuan was “artificially locked in” at a low price, Mr Naik said and added that if China freely floated its currency, it would appreciate within a week and then all of L&T’s units would become competitive.

He said he had taken this up with the Government, including the Finance and Commerce ministers, and highlighted that Indian industry would be wiped out, if not badly affected, by Chinese imports.

He had even told the Government that if these businesses did not do well, the company would be forced to either close them down or sell the units. He even wanted the Government to take the matter to the WTO to straighten out the issue.

No decision now

Mr Naik said these units were struggling but L&T was not going to take a decision on them right now. “We are struggling. We can’t give up something unless we make a full representation to the Government and see if we can resolve this issue,” he said.

On a two-day visit to the city, the L&T CMD said the rupee appreciation and the Chinese currency artificially locked in offered Chinese manufacturers a 35 per cent cost advantage. L&T could make up with productivity, but not to the extent of 35 per cent, he said.