Order books of exporters drying up: FICCI
Indian exporters have begun losing orders and their order book position now looks bleak as a stronger rupee has priced them out of the market, reports Sanjeev Sinha.Updated: Feb 12, 2008 22:43 IST
Indian exporters have begun losing orders and their order book position now looks bleak as a stronger rupee has priced them out of the market, according to the findings of a survey conducted by the Federation of Indian Chambers of Commerce and Industry (FICCI).
Until sometime back, it was the lower realisation in rupee terms that was adversely affecting business performance, but now even ‘order renewals’ have started taking a hit, the survey points out, adding that the exporting community was in deep distress.
In fact, the adverse impact of the rising rupee is being felt by all exporters with almost all (98 per cent) of the participating companies reporting that their export performance had been affected.
The survey questioned 293 companies with a wide geographical and sectoral spread -- ranging from automotive to consumer durables, and from food and food processing to FMCG and textiles.
According to the survey, 42 per cent of the companies reported that their exports would decline over the next six months, while another 17 per cent saw no change in export volume in the next two quarters. Besides, 60 per cent of the exporters reported that overall export conditions have deteriorated over the last six months. Nearly 50 per cent felt that the overall export situation would worsen in the next two quarters.
Even the outlook for export prices is equally disappointing, with nearly 34 per cent of the exporters reporting that prices would decline over the next six months. This figure stood at 18 per cent in the last survey.
The bad business is hitting the capacity utilisation levels of most companies. A year ago, for instance, nearly two-thirds of the participating companies were utilising more than 80 per cent of their installed capacities. Today, the proportion of companies using more than 80 per cent of their installed capacities stands reduced at 47 per cent. And the proportion of companies utilising anywhere between 40 per cent and 60 per cent of their installed capacities has gone up from 8 per cent to 27 percent over the last 12 months.
Nearly 45 per cent of the participating companies have also reported that their bankers have over the last few months tightened their lending norms and reduced the amount of foreign currency loans extended to them. Worse still, even the relief measures announced by the government seem completely inadequate. Exporters said that while the rupee has appreciated by almost 12 per cent over the last year, the benefits announced by the government would provide relief only to the extent of 3-5 per cent.