Dream run is about to end for sectors like seafood exports as local currency gains

KOCHI: The steady appreciation in rupee after the Lok Sabha elections has increased the worries of the exporting community coming as it does at a time when they are battling slack demand and fluctuating prices.

After initial fluctuation, the dollar had settled to Rs 60-61 for most of the months last year, which benefitted the exporters. Now with the new government at the centre, they were expecting better prospects but the increase in rupee value after the announcement of election results has upset their calculations .

They feel any further rise in rupee beyond Rs 58-a-dollar could eat into their revenue in the current year. Some sectors like seafood export has been having a dream run with an acute shortage of farmed shrimp in South East Asia raising the demand for Indian varieties.

“But over the last one month the shrimp prices have been dropping and the sudden rupee rise has come on top of that. If it was a gradual increase, we would have got some time to do something,’’ said seafood exporter Norbert Karikkaseri . Coffee too is facing a price fall. The arabica prices which rose to Rs 128.9 ($2.15) per pound after a long gap has fallen to Rs 109.72 ($1.83) per pound.

Unlike the seafood sector, the demand has been slack for coffee this fiscal and now the rupee rise has further aggravated the woes of the industry. Many exporters who entered into contracts earlier at a lower rate, have to suffer loss. “It is a bit of concern as many of us entered into contracts when the dollar was Rs 61. There has been a 5% drop in coffee exports already,’’ said Ramesh Rajah, president of Coffee Exporters Association of India.

The knitwear industry in Tirupur in Tamil Nadu has called for RBI intervention to arrest the rupee rise as it would lead to a loss of competitive edge for the industry which is on the path of recovery. The knitwear exports from Tirupur are over Rs 13,000 crore. According to Tirupur Exporters’ Association president A Sakthivel, the industry has regained momentum only last year after a poor growth in the previous 4 years.

The sectors resorting to imports for export may not feel the pinch so much. Cashew is one industry which imports nearly half the requirement of raw nuts. However, the industry had imported raw nuts at a higher rate and the stocks are still with the exporters . They will benefit while going for fresh imports.