Indian exporters negotiating for a rise in product pricing following the strengthening of the rupee have had little luck with overseas buyers, who were now turning to Chinese suppliers for their supply.
According to the findings of a national survey on issues plaguing Indian engineering exporters, conducted by the Engineering Export Promotion Council, 90 per cent of exporters who demanded a price hike from overseas buyers had their request rejected.
The main reason was the emergence of China as the alternative supplier for Indian engineering products globally.
In the survey, 58 per cent of respondents stated that they lost out to Chinese competitors on account of rupee appreciation.
Approximately 76 per cent of the respondents belonged to the ordinary category of EEPC members, with exports of over Rs 60 lakh per annum. The balance 24 per cent were associate members, with annual exports less than Rs 60 lakh. A total of 13 questions were asked.
USA remained the most important single export market for firms which responded to the survey. The appreciation of the rupee against the dollar affected them considerably.
Half of the respondents shifted focus from exports to domestic market sales. In all, 19 per cent of respondents believed that the rupee appreciation would lead to decline in exports of products in the current fiscal.
As many as 81 per cent warned that the export growth rate in value terms would drop in the current year.
Also, 22 per cent said that the growth rate could fall by over a quarter. In fact, 59 per cent said exports growth could fall to 10-25 per cent this fiscal.
The survey revealed that firms were using a combination of measures like internal cost control and investment in new technology to combat the problem and stay afloat.
There was a shift to a more capital intensive and labour saving manufacturing process in the small and medium scale sector. This meant significant downsizing in labour force on account of rupee appreciation
The percentage of reduction in labour force was still less than 10 per cent in most cases as many exporters were still fulfilling long-term contracts and enjoying good domestic market sales.
Such a situation could not continue for long. Lastly, the survey revealed that 80 per cent of exporters were upset with the government.
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