Indian private defence firms seek FERV cover against falling Rupee

NEW DELHI: Seeking safeguards against fluctuating value of Rupee, private Indian defence companies today asked the government to provide them protection under the Foreign Exchange Rate Variation ( FERV) policy for conducting business with foreign firms.

Demanding an equal and fair treatment against the Defence Public Sector Undertakings (DPSUs), industry body FICCI also sought appointing a Joint Secretary-rank official in the acquisition wing of Defence Ministry to look after the interests of Indian private sector.

"In the present scenario when the value of Rupee has declined so sharply, the only remedy for the existing contract has to be the Foreign Exchange Rate Variation (FERV) protection," FICCI's Chairman for Defence Committee M V Kotwal said.

Talking to reporters on sidelines of FICCI's Defence Committee Meeting to discuss new offset policy, Kotwal said "today, the market is in a volatile state. We have to ensure that risks do not go beyond control. The protections against currency variation have been implemented in the past as well."

The rates which can be followed for FERV protection are the one published by RBI or some other agreed rates, Kotwal said, adding "this is commonly done in many contracts. Even fertiliser sector is following this."

FERV guidelines are already applicable for the contracts signed by Defence PSUs.

To ensure fair representation of private sector in defence sector, Secretary General, FICCI, Rajiv Kumar, also talked about issues FICCI has raised with the government.

"In the committee of acquisition, there is a Joint Secretary who is incharge of the PSUs. We have recommended that there should be a Joint Secretary for the private sector as well. We have discussed this with the highest level. Time has come for that particular step now," Kumar said.