Nasscom expects government intervention for currency stability

Voicing concern over the depreciating rupee and its impact on the long-term contracts of the Indian IT companies, Nasscom president Som Mittal Thursday hoped the government would intervene to bring stability.

He said the IT industry got used to a currency level of Rs.54-56 against the US dollar and it should remain in the same range as the volatile and uncertain currency always create problems for business.

Talking to reporters here, Mittal said a stable currency was very important for IT industry given its global nature.

"From industry perspective for us it is very important that currency is stable because we sign long-term contracts with customers and if there is high volatility and uncertainty on the currency, we don't know where to peg our prices," said the chief of Nasscom, which is the trade association of Indian IT sector.

"While in shorter term you might say that the currency depreciating may be beneficial but it is very narrow. Majority is the time when we take long term contracts for five years. We also hedge at the same price. If we had contracts at Rs.54 to dollar then we would have also covered ourselves for the next five years at that value. It is not that we suddenly show windfall profits," he said.

Stating that IT companies were concerned over the uncertainty, Mittal said they were in dilemma whether they hedge their next contract at Rs.61 to a dollar and what if it becomes Rs.55 or Rs.64 later.

"As an industry we don't think currency management is our core competency. Our core competency is to get business delivered and make money. We don't want currency to be a profit or loss centre for us. I don't think our industry which is export-oriented would look at a very narrow view of what is going to be an advantage to us."