Will Indian exporters turn their backs on the greenback?
In an attempt to offset the negative effects of the ever-weakening US dollar, Indian leather and footwear manufacturers are attempting to alter the way that business has been done for many years by seeking to trade with overseas customers in regions such as Europe in currencies other than the US dollar, (the ‘Greenback’).
Speaking at the India International Leather Fair (IILF 2008) over the weekend, Council for Leather Exports (CLE) chairman Muktharul Amin, stated that although India’s leather and leather goods exports improved 9.4% in dollar-terms to reach $1.7 billion during the first six months of this fiscal year (April to September 2007), up from $1.5 billion in the corresponding period last year, as a result of the strong appreciation of the Indian currency during that time, the figures actually equate to a 3% decline in rupee-terms.
Highlighting the fact that some 64% of India's products are exported to the European Union and only 10.4% to the USA, he added: "Our deals with European buyers are in dollars, so it is not helping us. We are trying to negotiate to deal in other currencies and expand the market width and enter other countries as well."
Between January 31, 2007, and January 31, 2008, the Indian rupee has appreciated a massive 10.75% against the US dollar, which has severely affected profit margins for exporters, including those in the leather and footwear industries.
