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Falling rupee: Exporters pressurised to offer discounts

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Press Trust of India Chandigarh

With Indian exporters witnessing huge gains due to rupee depreciation against the US dollar, global buyers have started putting pressure on them to offer discounts of 5-10% on shipments, citing recessionary conditions or by finding fault with products.

Not wanting to sour their trade relations with buyers by getting into any argument amid a weak global economic sentiment, most Punjab exporters working in different industry verticals, such as garments, sports goods and light engineering items, have begun to bend.

The rupee, which has been Asia's worst-performing currency against greenback, has fallen by as much as 15% since July this year and is currently hovering above Rs 51 per dollar.

"The excitement of the depreciating rupee against the dollar is short-lived, because buyers have started pressurising us to offer the maximum discount on export of products in view of dollar appreciation, which will yield more realisation in rupee terms," Wool and Woollen Export Promotion Council Chairman Ashok Jaidka told PTI today.

Exporters said buyers are projecting that the rupee will soon depreciate to Rs 54 per US dollar and have asked for a discount ranging between 20-25% for booking new orders after factoring in the projected rupee value.

"But after hard bargaining, they finally settle at an 8-10% discount," he said.

Exporters pointed out buyers are going even to the extent of finding faults with products and have cited the poor economic scenario in their countries to get the maximum price reduction.

"It is buyers from Europe and US, West Asia, African countries who are demanding a price cut," said Engineering Export Promotion Council Regional Chairman SC Ralhan.

In the case of hand tools and other light engineering items, Punjab exporters are giving a 2-5% discount to buyers, exporters said. Punjab's annual exports amount to over Rs 13,000 crore.

 

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First Published: Nov 21 2011 | 2:24 PM IST

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