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As Rupee falls, exporters under pressure to offer discounts

Buyers have started pressurising us to offer maximum discount: traders

Press Trust of India  |  New Delhi 

Global buyers have started putting pressure on Indian exporters to offer discounts on shipments as they are witnessing gains due to rupee depreciation against the US dollar.

The exporters community said the fluctuation of rupee would not help much as most of the exporters have already booked their orders.

The rupee has hit its record low level of Rs 54.46 against dollar.

"Exporters are not happy as global buyers are asking for reduction in prices and discounts. The excitement of the depreciating rupee against the dollar is short-lived, because buyers have started pressurising us to offer the maximum discount on export of products," Director General of Federation of Indian Export Organisations (FIEO) Ajay Sahai said.

"To some extent it is (fall in rupee) good for exports but it would affect in long term as the buyer would ask for more and more discounts, which would affect our profit margins," Chairman of Apparel export promotion Council A Sakthivel said.

Sakthivel said buyers would always want their suppliers to reduce the price after they come to know that exchange rate fluctuation is giving good "returns" to exporters.

However, for some exporters, the fall in the rupee value against the greenback is not seen as a boost in view of a consistent increase in input costs.

"Depreciating rupee is not a thing to cherish for us as input costs have gone up substantially. We will not subscribe to the view that the rupee depreciation would give unexpected gains to exporters. We will like the rupee to hover at around Rs 46-47," Sahai added.

Meanwhile, the finance ministry said there was no need to panic and the slide would be contained when there is certainty in eurozone recovery.

"Rupee is falling due to global factors. This is no need to panic. The fall might continue till there is a certainty about the eurozone recovery. RBI is keeping a watch on it," a finance ministry official said.

Global risk aversion is putting pressure on the domestic currency as foreign funds are pulling out money. Besides, a widening current account deficit and concerns of investment in India is also putting pressure on the rupee. The Indian rupee has lost about 10% since it touched its peak in February.

To check the sliding rupee, the Reserve Bank had last week asked exporters to convert half of their foreign exchange reserves into rupee to make available dollars in the market.

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First Published: Wed, May 16 2012. 20:20 IST