Shining Re spelling doom for exporters

Though the Government had announced a package of relief sops for exporters hit by the rising rupee a few months ago...

Though the Government had announced a package of relief sops for exporters hit by the rising rupee a few months ago, the Department of Commerce is seriously worried that it may not be enough. It is fearing the worst – especially in employment-intensive sectors like textiles and handicrafts.

Union Commerce and Industry Minister Kamal Nath through a letter written to the Prime Minister has sought the Centre’s intervention in the hardening of the rupee as it is impacting textiles and handicrafts exports.

While a survey of 58 companies across sectors by the Commerce Ministry has revealed that over 10,000 jobs had been slashed in the first six months of the year, Nath has sought to impress the Prime Minister about the need for urgent government intervention, warning that ‘nearly two lakh jobs may be lost by March 2008, if no action is taken.’

Though the recently released provisional trade data, for the first six months of this year, show a 19 per cent jump over last year’s exports, even as the rupee has risen over ten per cent in the same period (from Rs 45 per dollar to Rs 40), the rise is largely fuelled by petrochemicals, that have gained due to the runaway global oil prices.

In rupee terms, exports by the textiles industry that employs 23 million workers are down 25 per cent; the handicrafts sector that employs 2 million is worst hit with exports dipping a massive 56 per cent. Handmade carpets, leather, tea and coffee exports have also suffered significantly, Nath has pointed out to the PM.

The meagre business done at the recent Indian Handicraft and Gifts Expo, hosted by the Export Promotion Council for Handicrafts, exhibited that the sops announced for exporters are not working. The annual event that drew export orders worth Rs 1,500 crore last year and expected similar commitments this year, was only able to muster up Rs 550 crore by the time it closed on October 19.

Tales of textile companies’ woes are also pouring in – Vadodara-based IC Textiles’ chairman Sunil Jain has written to Nath informing him that the mill is being shut down and over a 1,050 employees are being retrenched. From a situation of cash surplus, at the same time last year, the rising rupee has led the firm to a loss of Rs 6.5 crore in six months, the CMD had pointed out.

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Nath’s missive to the PM is likely to raise the heckles of the Finance Ministry that has been hinting that additional concessions for exporters are unlikely. But with the prospect of a general election still looming, the government may be forced to conjure up some steps to prevent rising job losses.