Will a volatile rupee make the Indian market even more volatile?

 

From left to right- Suhas Bohra, Company Secretary, Aramex India, Padma Shri M. Rafeeque Ahmed, President FIEO & Chairman, Farida Group, Ajay Sahai, Director General & CEO FIEO and Vidya Mahambare, Principal Economist, CRISIL, at the Business Standard Smart Business in association with FIEO in Mumbai on 13th Aug, 2013.

Mr. Krishna Kant, the moderator, initiated the discussion by inviting views of each panelist on rupee volatility.

Mr. Ahmed said that Indian currency has not declined alone and thus, the exporters should not control the foreign trade transactions and strategize to increase the market share instead. Dollar has become a strong currency, that has also pushed a lot of pressure on other currency. In normal course, rupee should prove a boom to Indians. He added that Branding India is essential and that the exporter can brand the commodity or product depending upon how the brand is positioned in a particular market. Any exporter can position its product by setting a competitive pricing strategy.

Ms. Vidya was of the view that rupee is determined on the forces of demand & supply of dollars. If we don’t want rupee to fluctuate, we need to attract 90 billion dollar currency inflow from FII, FDI or ECBs. She also spoke of the possibilities of gold imports coming down, decrease in Current Account Deficit and foreign currency inflow picking up by March 2014.

On establishing brands in the international market, she said that the manufacturing sector in India should be strong. Instead of manufacturing plants being set up in foreign countries it should be promoted to set up in India.

Mr. Ajay Sahai said that one aspect, through which foreign currency is derived, is by exports of services and merchandise. On services front, India is having a surplus of 50 billion but deficit in merchandise exports is close to 190 billion dollar. From He explained that the future rupee volatility purely depends on the demand supply forces of dollar and the exporters can invest depending upon the options & derivatives in the market.

Mr. Yogesh Dixit from CRISIL added that simply blaming a country’s policy will not lead the exporters anywhere. The Industries and bodies like FIEO have to take initiatives to take up matters to the government.

The Government is highly rigid on pharmaceutical products and effluents and it should alter certain policies to increase the exports of the country.

Other than the panellists, also present were Mr. Amit Goyal, Vice President & RC, FIEO (WR) and Mr. Khalid Khan, Managing Committee Member, FIEO.

The discussion ended with Mr. Krishna Kant’s vote of thanks to all the panellists & exporters for sharing their views on rupee volatility and its impact on India.