Strengthening rupee causes major losses for Punjab SSIs

Punjab's small-scale units are feeling the heat of the strengthening rupee against dollar. While the rupee is at its peak in about 10 years, those engaged in dealing with export units are complaining of delayed payments. Market experts have warned that losses arising out of the present situation can be as high as Rs 1,200 crore for small units across the state.

Ludhiana's exports are around Rs 7,000 crore and Punjab's roughly Rs 12,000 crore. The 10 per cent rise would mean net losses of Rs 1,200 crore for the state and Rs 700 crore for the industrial town.

Major industries that are suffering are engineering goods-- cycle, auto parts, handtools and textiles.

A large number of exporters are trying to delay acceptance of payments, hoping that the coming days would witness a rise in dollar vis a vis rupee and a better the scenario for them. As a result, units associated with such enterprises are complaining of delays in their payments.

The 10 per cent rise in rupee value within six months has affected sales and profit margins by an equal value, said experts.

S C Ralhan, regional chairman, Engineers Export Promotion Council, said this 10 per cent difference could lead to heavy losses as a similar decline is being witnessed in sales and also in margins.

"A 10 percent rise is quite high, a unit can accommodate may be 2 or 3 per cent but this kind of difference could result in heavy losses. The orders received were prior to strengthening of rupee but since the scene has changed now, a large number of exporters are silent so as to delay the receipt of payments."

Disturbed over the changes in rupee value, exporters said barring importers, none of the sectors was benefiting from the current change.

"If the scene continues, the manufacturing sector would be hit hard as people would want to import at lower prices," an irate exporter opined.

Delay in payments is not only affecting units dealing with exporting enterprises, it would also have a bearing on trade in the coming days. "As a result of current delays, raw material procurement in the next few weeks too would be delayed and so would be other processes. If unchanged, this situation could hit our exports hard," said Ralhan.

Industrialists said while all input costs had increased by over three times in the last decade, the current rupee value had diminished their earnings.

They said if the government did not come to their rescue the situation could toughen for them. "The government should fix the parity rate (export) or offer subsidies to exporters. We are quite disappointed with the government's statements that country is flourishing when the SME that contribute to over 60 per cent of total exports, are being hit so badly."