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GEA demands relief for the rising value of Rupee
22
Oct '10
Mr Rakesh Vaid, President, Garments Exporters Association, has expressed serious concern on steep appreciation of Indian Rupee by over 7 per cent within a short span of about two months. The appreciation of rupee has brought cheers to importers and fears to exporters who are not happy as they are now getting lesser rupee per dollar resulting in sharp decline in overseas realizations. Readjustment of rupee is therefore, imperative to protect the long term interest of exporters.

Mr Vaid has called for an immediate RBI intervention in the foreign exchange market to manage the fluctuations in currency exchange rate, which are mainly due to surge in the capital flows from abroad, by adopting affective exchange rate management policy. Mr Vaid has also called for a careful assessment and monitoring of the exchange rate to ensure that financial flows do not adversely affect the exporters.

Mr.Vaid felt that if not dealt with effectively and promptly the steep and sudden rise in the value of rupee will hurt export performance and we may not able to achieve export target this year also.

Mr Vaid observed that if appreciation of rupee continues, it will not only slowdown the growth rate of exports but will also further erode wafer-thin profit margins of exporters and adversely impact their competitiveness.

Mr Vaid pointed out that the recent reduction in duty drawback rates, steep hike in yarns and fabric prices along with the rupee appreciation has hit the exporters very hard making them non-competitive in the international market. The RBI must intervene and buy dollars to weaken the rupee and protect the exporters.

Mr.Vaid also stressed the need to increase the current duty drawback rates by increasing the scope and coverage of duty drawback scheme so as to ensure full reimbursement of excise duties, custom duties, service tax, education cess and various state level taxes.

Mr. Vaid said apart from improving the industry's cost competitiveness, it is necessary to increase installed capacity in the apparel industry and give fiscal incentives for market, product and skill development. The Government should also make efforts to ensure financial stability in the external sector along with the much emphasized need for price stability in the domestic sector.

Garments Exporters Association

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