Tech hubs feel the pinch as rupee continues southern voyage

NEW DELHI/KOLKATA: The plummeting rupee has cast a lengthening shadow across India’s tech and appliances hubs such as Delhi’s Nehru Place and Lamington Road in Mumbai, with footfall down by a fifth as prices of imported electronic items have shot up 15% over the past month alone. Traders fear that sales during the upcoming festive season may fall as much as a half of the year-ago period.

“Prices of imported products are going up and this is bound to have an impact on sales this festive season, not that we have had anything to cheer for in the past few months either,” says Rishi Kumar Agarwal, owner of Harmony Computers in Nehru Place which clocks at least 20% of its annual sales during the festive season.

The mood is equally sombre in Kolkata’s Fancy Market and Five Star Market, Gaffar Market in Delhi and Chennai’s Ritchie Street. With the rupee sliding past 64, prices of laptops, desktops, tablets, mobile phones and accessories have been on a sharp and steady rise. On Wednesday, the rupee closed at 64.02 to a US dollar, the lowest for the Indian currency.
The rupee has tumbled over 13% against the dollar since the beginning of April and several measures by the Reserve Bank of India have not managed to arrest its free fall.

A Deutsche Bank report on Wednesday said the rupee could drop to 70 against the dollar in a month. Customer spending has been slackening over the past few months and business is down 50%, says Rajan Madaan, owner of Vidhit Electronics in Gaffar Market, where imported TVs, phones, electronic pianos and other appliances are on sale alongside imported shoes, watches, perfumes and cosmetics.

Traders in Kolkata’s popular Fancy Market and Five Star Market in Khidirpur say month-onmonth sales have declined 15-25% in July-August. The markets are popular for imported large-screen LED and LCD televisions, gaming consoles such as PS3 and Xbox, Blu-ray players, imported perfumes, personal care products, home decor and musical instruments.

The recent ban on free imports of flat-screen televisions from neighbouring countries has come as a double whammy. “While our prices will be still lower than the main market, the sharp increase in prices is acting as big deterrent for consumers. We are now planning to offer EMI scheme for our regular customers,” says Akbar Ali, a shop owner in Fancy Market who deals in musical instruments.

On Ritchie Street in Chennai, which is touted as the biggest IT market in India after Nehru Place, shop owners are bracing themselves for dull festive months after footfall declined 40% in August.

“People are delaying their purchases. They are waiting for prices to come down. To keep up the sales we have even taken a margin hit, but even then prices are high. We cannot sustain it for long,” says Padam Singh of Kaba Infotek. Some importers are trying to salvage the situation by selling at revised prices the stock imported earlier.

“But if the rupee reaches 70 to a dollar, even this might not suffice,” says an importer, who does not wish to be named. Sanjay Jain of Ultra Peripherals, on Lamington Road, says not just individuals but also corporations have deferred their purchases. “Many of our orders have gone on hold. For some of the orders we have to submit re-quotations. We have seen a dip of nearly 25% in the number of orders we are executing,” says Jain.

Several traders have even stopped imports and opted to wait for the rupee to stabilise. But this has led to a shortage of products in the market, further accentuating the price rise and deterring customers.