Appreciating Rupee and alarmed exporters
President, Federation of Indian Export Organisations (FIEO), feels that as a consequence of Rupee Appreciation on exports and manufacturing, the profitability of the exporters have been wiped out and constant appreciation is threatening the competitiveness of our products.
He emphasised that
1. If we lose the market, the aggressive competitors are just setting on the fence to occupy the market.
2. The downfall in exports is also affecting the industrial production which has slipped from 13.2% in July 2006 to 7.1% in July this year.
3. The package announced by the Government in June 2006 by and large remains only on paper with marginal benefits to exporters.
4. No effect of Rupee Appreciation has been taken in drawback rates.
5. The service tax benefit has been confined to only few services leaving a host of services outside the ambit of refund.
6. No decision has been taken in making EEFC account an interest bearing account as announced earlier.
7. US Dollar may touch Rs. 38/- by December 2008.
His demands
1. Immediate reduction in PLR by 100-125 basis points to reduce the interest burden and add to competitiveness of industry.
2. Reduction in transaction cost through exemption option rather than refund route for service tax, VAT etc., which adds to transaction time and cost as well as avoidable paper work.
3. An institutional mechanism through a high level committee headed by Prime Minister with C&IM, FM, Textiles Minister, Governor, RBI, Deputy Chairman, Planning Commission, Chairman, PM's Economic Advisory Committee and Apex Export Organisations to take on the spot decision may be constituted.
His suggestion to the Industry
1. Explore the possibility of invoicing in other currencies or in Rupee and use hedging option to safeguard against the losses.
2. Explore new markets and upgrade the products by value addition.