Global buyers seek share of spoils of falling rupee
10 June 2013
With the rupee continuing to lose its value against the dollar, global buyers have started discounting the value of the country's exports and are now demanding that they get their share of the benefits to Indian exporters.
Global buyers are now pressing for renegotiation of deals already contracted under the then existing exchange rates or discounts of up to 10-15 per cent.
With the rupee already down nearly 7 per cent in the last one month or so and expected to decline further, industry bodies are demanding an overhaul of policies to put the economy in a new reform path.
According to the Federation of Indian Export Organisations (FIEO), the continuous fall in the domestic currency is not doing any good to exporters as international buyers are asking for discounts. ''Global buyers are putting pressure for more and more discounts. They are asking for about 10-15 per cent. They want to re-negotiate the deals,'' Ajay Sahai, director-general of FIEO, said.
''In the long-term, the volatility will add to the instability and speculation affecting the business confidence of exporters,'' he added.
The worst thing is that the falling rupee would further increase the country's current account deficit as the rupee value of gold and crude oil imports increase, says industry body Assocham.
India's exports declined 1.76 per cent at $300.6 billion in the 2012-13 financial year even as its trade deficit for the year mounted to $190.91 billion, which it attributes to a global slowdown.
The finance ministry still thinks that the marker panic over the falling rupee is unwarranted, as it would settle down in some time.