Leather exporters knock PM's door for support
Leather exporters have sought help from the Prime Minsiter to overcome the crisis created by the steady appreciation in the value of the rupee.
By TNN |
NEW DELHI: Leather exporters have sought help from the Prime Minsiter to overcome the crisis created by the steady appreciation in the value of the rupee. A delegation from the council of leather exports (CLE) met Prime Miniser Manmohan Singh and asked for sops to bail the industry out.
According to the CLE, the Prime Miniser agreed to consult relevant ministries to find a way out of the problem. The exporters pointed out to the Prime Minister that a large number of leather exporters were facing closure due to lower export realisation.
The council had earlier proposed that a foreign exchange fluctuation allowance (FEFA) to the extent of 6.22% of FoB value should be introduced to support the leather industry till the rupee settles at pre-March level.
“About 92% of the exporters have a turnover of less than $ 5 million. All these units in the SME sector operate with wafer thin margins and are significantly affected by rupee appreciation,” CLE chairman Mukhtarul Amin said. The sector employs about 2.5 million workers whose future hangs in balance, the council added.
To demonstrate loss of competitiveness, the CLE pointed out that about 70% of the India’s leather exports was denominated in dollars. For an estimated export of $3.5 billion in the current year (2007-08), the estimated US transaction would be $ 2.3 billion.
With the dollar valued at Rs 44, exports would have fetched Rs 10,160 crores. However, with a lower value of Rs 40 or less, the transaction would fetch Rs 9,200 crore or less. This would be at least Rs 960 crore lower than the estimated revenue gains from exports.
According to the CLE, the Prime Miniser agreed to consult relevant ministries to find a way out of the problem. The exporters pointed out to the Prime Minister that a large number of leather exporters were facing closure due to lower export realisation.
The council had earlier proposed that a foreign exchange fluctuation allowance (FEFA) to the extent of 6.22% of FoB value should be introduced to support the leather industry till the rupee settles at pre-March level.
“About 92% of the exporters have a turnover of less than $ 5 million. All these units in the SME sector operate with wafer thin margins and are significantly affected by rupee appreciation,” CLE chairman Mukhtarul Amin said. The sector employs about 2.5 million workers whose future hangs in balance, the council added.
To demonstrate loss of competitiveness, the CLE pointed out that about 70% of the India’s leather exports was denominated in dollars. For an estimated export of $3.5 billion in the current year (2007-08), the estimated US transaction would be $ 2.3 billion.
With the dollar valued at Rs 44, exports would have fetched Rs 10,160 crores. However, with a lower value of Rs 40 or less, the transaction would fetch Rs 9,200 crore or less. This would be at least Rs 960 crore lower than the estimated revenue gains from exports.
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