The Rupee and the Small Exporter ; Exporters Are Reconciled to Living with a Strong Rupee. But That Doesn't Mean They Are Liking It. Bottom Lines, Margins, Even Orders Are Shrinking. What Are These Exporters Doing to Ensure Their Survival?

Summary

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Sitting in his Chennai office, Rafeeque Ahmad, Chairman, Farida Group, a leather shoe exporter, is a worried man. The appreciation of the rupee against the dollar has severely eroded the profit margins of his company, forcing him to contemplate drastic measures like reducing his workforce. "We are planning to shut one factory and will retrench 15-20 per cent of our employees," he says.

Cut to Mumbai. Vijay Agarwal, Chairman of Creative Group, a leading textile exporter, is also concerned. "We are losing orders due to the rise in the rupee value and have already asked some employees to leave."

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The Rupee and the Small Exporter ; Exporters Are Reconciled to Living with a Strong Rupee. But That Doesn't Mean They Are Liking It. Bottom Lines, Margins, Even Orders Are Shrinking. What Are These Exporters Doing to Ensure Their Survival?

These are not isolated incidents. Exporters across sectors are feeling the heat of the strengthening rupee, which is now trading at just over Rs 39 to the dollar, its strongest level since March 1998, having risen more than 12 per cent against the dollar this year. This has meant dwindling margins for exporters and, in the face of increased competition from other low-cost countries in Asia, has dealt a body blow to both services (mainly information technology) and merchandise exports.

To underline the gravity of the situation, the Federation of Indian Export ...

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