Depreciating rupee delays export, import orders
The sustained depreciation of rupee in the past one month is showing its impact on the industry as both the exporters and importers in city have put their orders on hold.punjab Updated: Jul 10, 2013 18:36 IST
The sustained depreciation of rupee in the past one month is showing its impact on the industry as both the exporters and importers in city have put their orders on hold.
The importers, who are being directly hit due to the situation, have reduced their orders considerably to minimise the losses, whereas many exporters have put their export orders on hold because of demand of heavy discounts from the customers.
Contrary to the common perception that the exporters would benefit from the strengthening US Dollar, the exporters here in the city, that is the hub of industry in state, rued that looking into the stronger position of the US currency, the overseas customers were demanding huge discounts from the manufacturers.
The exporters expressed that in an ideal situation, strengthening of rupee helped them, but the huge depreciation of the Indian currency had made their customers aware of the situation, who were seeking discounts, while the aspect of increase in input costs due to the situation was being ignored.
SC Ralhan, president, Ludhiana Hand Tools Association, and chairman of Engineering Exports Promotion Council, said the customers were virtually resorting to pressuring the manufacturers for granting discounts in the purchase. “Due to prevailing situation, the manufacturers are forced to pay discounts of about 2 to 5% or put the orders on hold, which is hurting them,” he said.
Rahul Ahuja, managing director of Rajnish Industries Limited, a manufacturers of auto parts, said what was more worrisome was the fact that the customers were ignoring the very fact that due to depreciation of rupee, their input costs had gone up.
“Due to the prevailing situation, we have to put on hold the supply of auto parts to our clients in Germany and Indonesia because they were demanding huge discounts,” he said, adding that they had no other option but to extend discounts or delay the consignments till the situation improved.
On the other hand, importers who are the direct sufferers on account of prevailing conditions have reduced their imports.
Ripan Jain, managing director of Sharman Shawls, said due to continuous depreciation of rupee, imports of law wool used in shawl manufacturing had gone very costly and was making them uncompetitive in the market.
“Its affect is visible as we had to reduce the imports by about 25% recently,” he said, adding that industry dependent on imports had no other option but to reduce the imports. Meanwhile, manufacturers of cycle parts are a happy lot. Due to prevailing situation the imports of cycles and their parts, which is mainly done from China, has gone costly, thereby giving the local parts manufacturers a chance to raise their business.
Pardeep Wadhawan, secretary of United Cycle and Parts Manufacturers Association, said the cycle parts' manufacturers were happy with the situation.