Declining rupee a conundrum for scientific instruments manufacturers

The education aid provided by the UN to the developing nations helps the firms in getting orders for export

The declining value of rupee has had an impact on the scientific instrument cluster of Ambala. The entrepreneurs in the exports of scientific instruments said that the weakening of Indian rupee against US dollar was a double edged sword.

The realisations have increased to some extend but an absolute uncertainity across the sectors makes the decision making for the small entrepreneurs.

Ashwani Goel, past president of Ambala Scientific Instruments Manufacturers’ Association said that the exchange rate fluctuations are a double edged sword for the exporters. The contracts for exports are signed a few weeks in advance. In the current economic uncertainity, it is difficult to anticipate the price and cost at the time of delivery of the consignment.

The small players, he added that do not resort to hedging of currency because it is not viable for us.

Ambala Scientifc cluster has a about 400 units and some of these were set up before independnce.

The SMEs here export the scientific instruments worth Rs 200 cr every year to the countries like Nigeria, Ghana,Tango, Egypt, Middle East, Malaysia, Singapore, Pakistan, Bangla Desh and Nepal.

The education aid provided by the united nations to the developing nations helps the firms in getting orders in the export market.

Out of the total business generated here in Ambala,  the contribution of exports is 25%.

In the last week, the revision of price of copper (a major input) by Rs 40 in a single day, has hit the bottomlines of the small firms.

Puneet Gupta, another entrepreneur in the town said that unstable market equalizes the windfall gains in the form of higher returns during the falling value of home currency.

The cluster was already severely hit in the past decade due to cheaper scientific instruments exported by China. The competitive price offered by the Chinses companies made it unviable for the Indian manufacturers to sustain in the export business and the exports from Ambala fell sharply in last few years.

The buyers of the scientific instruments in the international market do not press to renegotiate the contracts as the value of contract is not very high.

But the unceratin market conditions undermine the confidence of the exporters as the low volume firms do not have the resistence to bear the shocks of sudden change in the business climate, he added.