New Delhi, June 20 (IANS) A fluctuating exchange rate, the debt crisis in Europe, rising input costs and a possible interest rate hike by the Reserve Bank of India may hit Indian exports, says a report by a leading industry lobby.
‘Exporters were caught off guard by the recent decline in the value of the rupee and they lost account of forward contracts that were booked to hedge currency risk,’ said a survey conducted by the Federation of Indian Chambers of Commerce and Industry (FICCI).
Forward contracts are agreements between two parties to buy or sell goods at a price at a specified time in future.
‘There are indications of buyers in the European Union (EU) going slow in placing their orders. There are also cases where Indian companies have been asked to hold back the dispatch of consignments,’ said the survey after consolidating responses from over 278 export firms.
Indian exporters have also had to take temporary terminals for parking goods in the EU region as buyers have refused to accept immediate delivery, it added.
To counter the the threat of a decline in exports, exporters are are negotiating with their clients and evolving pricing models to take care of currency fluctuations.
Some, who can afford, are not converting their dollar receivables into rupees as the exchange rate risk at this point is too high.
Companies with turnover ranging from Rs.1 crore to Rs.140,000 crore had participated in this survey from sectors like automobile, FMCG, pharmaceuticals, textiles, metal and metal products, heavy engineering and marine products.
‘Some exporters were of the view that the central bank should give a facility like that in China of a fixed exchange rate. This would enable them to focus on managing their business and save them from the trouble of managing currency movements,’ said the report.
Rising cost of inputs, including oil, is another cause of worry with exporters now asking the government to increase incentive schemes.
‘While exporters are trying their best to look at alternate markets, they have asked government to successfully negotiate a free trade agreement with the EU at the earliest.’
