The government today asked companies to increase efficiency and cut costs to remain export competitive in the wake of strengthening of the rupee against other currencies."China calibrates exchange rates, but we've left it to be market determined. I really don't think government should be intervening... We did away with (this practice) as part of reforms," commerce and industry minister Kamal Nath said."I know the industry will be pained, but it needs to look for increasing efficiency and cost effectiveness," he said when asked what the government was doing to protect IT firms from rupee rise shock.The Indian currency has risen nearly 11% against the dollar in 2007 and about 14% in the past one year. The country's central bank has not intervened much as this makes imports cheaper, helping it control inflation in the world's second-fastest growing major economy.However, the appreciating rupee has also hurt exporters, particularly software companies, which derive more than half of their revenue from the US. Besides, the government is aiming at merchandise exports of $160 billion in FY08, but the target may be scaled down if the rupee continues to harden.Nath said IT companies have been enjoying tax concessions for too long, which has led to a disconnect between the IT sector and rural India."Other sectors like pharma, auto components and even agriculturists say if we had had the same benefits (as IT firms) we would have grown by the same level."He, however, said the government would see how it can give some relief to the IT sector.
