Cash crunch forces more businesses to switch to barter trade

Barter trade is fast returning in India as well while businesses the world over are looking for alternative ways of saving cash amidst the big slump, according to a top industry official.

Barter trade has almost doubled since last year, mostly in the past few months, with the use of a unique concept that besides goods and commodities, facilitates bartering of services and even concepts, Vipul Rawal, CEO of bartermaniac.com, said.

"In the current economic downturn, global barter exchange companies are growing at 15 to 60 per cent and the same trend is fast catching up here in India too," Rawal said in Mumbai.

Bartermania.com has launched a barter exchange named India Barter Exchange (IBX). The exchange offers membership to business, including professionals offering various services.

Professionals like lawyers, doctors, chartered accountants or those who offer services like recruitment, housekeeping, transportation, security, IT hardware and maintenance, restaurants as also manufacturers and traders can join the exchange by paying a nominal annual fee.

The moment anyone becomes a member of the `Barter Club', he is eligible to a credit of say 15,000 Barter Rupees, he pointed out.

Using the credit facility, the member can buy goods or services from any other member or members of the club up to the limit of Rs15,000. In return, he can also sell his services to any member of the club. The more he sells, the more his credit rises by that amount and he in return can avail any services or goods for that amount, Rawal said.

The Barter Club works this way: If A is a doctor and he uses B's services which is housekeeping, let us say the bill was Rs5,000, B will not be paid Rs5,000 in cash. Instead, he can use the money to buy any other service or good he may require.

He can also accumulate the money for making further purchases from any member of the club.

"Businesses are becoming more receptive to the idea of barter. The slowing economy has certainly helped grow the barter exchange," Rawal said.

While barter trade is still a fraction of India's annual commerce (10 to 12 per cent), nearly 30 per cent of world business is barter and 65 per cent of Fortune 500 companies engage in barter in one form or the another, he pointed out.

About 65 per cent of the companies listed on the New York Stock Exchange are involved in barter trade, according to the Universal Barter Group, Rawal said.