Exports under threat
Exporters have been scurrying for cover to hedge losses as an appreciating rupee has brought down their earnings, reports Gaurav Choudhury.
India's exports grew by 19 per cent in September, the highest in five months. However, small textile and handicraft traders are beginning to feel the heat as the rupee hit a new high on Thursday, scaling to Rs 39.22 to a dollar.
Exporters have been scurrying for cover to hedge losses as an appreciating rupee has brought down their earnings.
The textile industry, the country's largest employer in the organised sector, and the handicraft sector have been hardest hit, registering cumulative negative growths since April. Federation of India Export Organisation (FIEO) President Ganesh Gupta said that unless drastic steps to arrest the slide were taken, about 80 lakh people could end up losing their jobs. Handicrafts exports, engaging thousands of small and medium exporters, was another major sector affected by the rupee's rising march. In April and May, the sector clocked negative growth of over 70 per cent.
Trade analysts said small and medium exporters were feeling the pinch because they were unable to hedge currency fluctuation losses due to smaller volumes.
The rupee on Thursday hit a nine-an-a-half-year high before ending at Rs 39.31 per dollar, marginally higher from its previous close of 39.32. The $160-billion export target for 2007-08 appears increasingly unattainable in the wake of an erosion of earnings, although commerce minister Kamal Nath was optimistic about achieving the target.
In September, exports increased by 19.26 per cent, while imports were up a moderate 2.31 per cent. However, in rupee terms, the exports growth was 4.31 per cent, while imports declined 10.51 per cent.