With the overall export growth rate coming under strain in the wake of a rising rupee,  the government has taken a timely step by  unveiling another round of relief package for exporters. The fresh package of Rs 500 crore is in the form of interest subvention to compensate for the fall in exporters’ profits due to the appreciation of the rupee against the US dollar.

The government hopes that the measure will ensure mitigation of the effect of rupee appreciation across all export sectors, make them internationally competitive and  enable them to achieve their targets. When the country is increasingly looking forward to  boost its international trade, the slowing down of exports is posing a serious challenge to economic growth. Latest surveys show that the rising rupee has finally started taking its toll.
Exporters are losing orders and their order book position looks bleak as the strong rupee has priced out many exporters from the market. 

While the spiralling rise in prices of raw material prices, coupled with a high interest rate regime, has accentuated the cost pressure, forcing exporters to look at increasing their prices,  the rising rupee is reducing the competitiveness of Indian exports. The government has already announced, till now, various packages totalling Rs 5,200 crore to help the exporters. But industry bodies complain that the relief measures have been “completely inadequate’’. A large number of exporters have also complained of administrative problems they have to deal with to avail of the benefits.

Though the government has a role to play in boosting exports through necessary policy initiatives,  exporters must also realise that they should learn fast to adjust with the phenomenon of a strong rupee. With the Indian economy emerging as one of the fastest growing economies in the world the status of the rupee is undergoing rapid changes. In the emerging global financial architecture the rupee is no more being perceived as a weak currency as has been the case till date.

It is in the exporters’ interest to realise that the only way to cope with a strong rupee is to further sharpen their competitiveness by cutting down manufacturing costs through adoption of innovative state-of-the-art manufacturing processes and increasing productivity. Strategies like looking for new geographies of business will need to be explored. The government can also help by  reducing the bottlenecks in infrastructure, which is a major area of constraint for exporters.