Rupee appreciation will help Indian domestic companies aquire asset overseas at about 10% lower cost.It will make the imports cheaper(we import more than export)and play a positive role in making export oriented unit more efficient.No exporter needs to die .Necessity will push them to change their mindset to quote in Indian rupees and alternative currencies. It will be a temporary set back but largely the economy will be benifited.
RE:rupee appreciation
by Girish Kakar on Jul 26, 2007 04:38 PM Permalink
haha.....do u hav any idea how big is the US market.....n if india loses its market in US due to high value of rupee how much will india lose???.....for ur kind info,US is the larget importer in the world......india has a growing manufaturing sector n once profuction exceeds local demand exports come to rescue.....n losing US will be a big set back for the growth of the indian eco....if u r made the FM the,i fear ur "temporary set back" from becoming a "permanent set back"
RE:rupee appreciation
by saravana kodandapani on Jul 26, 2007 08:11 PM Permalink
Exchange values have multiple implications and depends on who you are. If you are a businessman importing raw materials (mostly from other developing countries) and manufacturing finished products and doing business within India catering to domestic consumption or exporting to dollar economies, then a rising rupee is good. Why ,because you can pass on the benefit of higher purchasing power of the rupee to the consumer since the input cost in terms of cheap imports of raw materials, cheap oil, transport cost,imported machinery cost etc, will be lower as you will get more dollars per rupee and retail price reduction is possible. Then more and more people who were previously out of your customer bracket will now come into your fold and buy your products realizing huge volume in sales. Technology imports and upgradation will also be cheaper since you will pay less in dollar terms if the rupee appreciates. These industries are Commercial aviation, professional services like health care,education,etc. Other Infrastructure creating industries like road building ,power generation, essential utilities like water resource management , surface transport etc will also benefit from rising rupee because our rupee will buy more cement, steel, bitumen etc etc, either locally or through cheap imports if the rupee is strong. If you are a importer of finished products and catering to domestic consumption without any value addition, rising rupee is good news again since it allows you to pu
RE:rupee appreciation
by saravana kodandapani on Jul 26, 2007 08:18 PM Permalink
If you are a importer of finished products and catering to domestic consumption without any value addition, rising rupee is good news again since it allows you to purchase more units of the same product and the cost per unit comes down and high volume sales of imported items in thedomestic market is then possible. If you are a exporter of raw material without any value addition, then a rising rupee is bad news since your client will be forced to pay more dollars for your product and this will force him to look at other sources of cheap raw material since cost is the only factor that determines his purchasing behaviour as there is no value addition. If you are an exporter of finished ethnic products like bangles, bindis,lehengas,jewellery etc, rupee appreciation has little relevance since the profit margins in these items are very high and the clients will be looking for purchasing from you only since other countries cannot compete with your ethnic items. If you are exporting high value finished products like cars ,electronic items etc which as such is not very much in India, then the product commands the price in the market and still you do not have to worry about rupee appreciation. This is the reason why countries like Japan, America , Europe have strong currencies because the govt has a job to do in the form of running the country by providing good roads, infrastructure,Continuous Electricity, Water, etc etc to its citizens, who inturn repay the govt in the form of ta
RE:RE:rupee appreciation
by saravana kodandapani on Jul 26, 2007 08:20 PM Permalink
This is the reason why countries like Japan, America , Europe have strong currencies because the govt has a job to do in the form of running the country by providing good roads, infrastructure,Continuous Electricity, Water, etc etc to its citizens, who inturn repay the govt in the form of taxes by generating revenue by excelling in their professional abilities and creating a demand for their services and products not just locally but all over the globe. That is why you have Japanese,American,French,and British majors exporting high end products like Electronic gadgets, High end cars, passenger jets, Missile warfare systems, Nuclear submarines etc and not clothes, peanuts, bananas . Indian Exporters on the other hand want to export items on the lower end of the value chain like raw materials, textiles,Food items, body shopping etc because these do not require R&D, can be prepared with low wages, High end technology is usually not necessary and Profit margins are huge in dollar terms if they can ensure that the rupee is always weak. In this way,over a period of time ,undereducated, semiskilled or unskilled workforce will find employment in one form or the other and this kind of manual labour driven employment generation and manpower oriented industries thrive under these guidelines, but the general quality of life will be poor since the industrialists and beaurocrats ensure that the profits generated in dollar terms does not trickle down to the labourer who is satisfied wit
RE:rupee appreciation
by saravana kodandapani on Jul 26, 2007 08:31 PM Permalink
To elevate this entire billion to the higher end of the value chain white collared employment, requires huge investments in basic healthcare, primary secondary and tertiary education, infrastructure for roads,electricity, river water sharing, ecological conservation,High end R&D labs in niche segments, etc for which it requires a strong rupee,but in its pursuit of a strong rupee, it runs the risk of making entire lower end sectors unprofitable and the millions associated with these sectors will go hungry like what is happening with farmers, tea sector workers today.Even in America Workers at the lower end of the value chain getting laid off due to rising dollar is a problem but the govt is able to manage since their numbers are not huge like in India, and there is a social security system in place. The only solution our govt has is to turn protectionist with a rising rupee where cheap imports of products like agricultural produce, raw materials, are prohibited, atleast the domestic market is guaranteed with a minimum purchase price that can sustain life in these industries and subsidies are given along with a tax holiday to make it lucrative for private players as well as foreign investors to invest in rural employment generation. This then goes against the principles of free market economy and the other section of exporters feel the ripple effect when other countries turn protectionist. While the magnitude of our population makes low value,low end job creation a priority
RE:rupee appreciation
by Confused on Jul 30, 2007 01:59 AM Permalink
Dear Saravana Kondapani, Please post the summery of your comments in 5 lines. thank you, Saddam Hussein
RE:RE:RE:rupee appreciation
by saravana kodandapani on Jul 26, 2007 08:23 PM Permalink
the general quality of life will be poor since the industrialists and beaurocrats ensure that the profits generated in dollar terms does not trickle down to the labourer who is satisfied with a hand to mouth existence for which he is evergrateful and the huge chunk of profits cornered by Agricultural ,Pharmaceutical,Manufacturing exporters which when combined with tax evasion increases the divide between the rich and the poor.The govts cannot meet the aspirations of providing the basic amenities to its citizens coupled with a weak rupee. The govt depends on these employed people and industrialists to generate good profits, pay good taxes and fill the coffers of the govt for it to spend. However this does not happen because of tax evasion, underwriting, low wages to the extent that the govt gets peanuts in return for the artificially weak rupee that it has created and the rich get richer and the rich-poor divide becomes larger.. The govt is faced with a unique situation here, it has a billion mouths to feed, a billion pairs of hands willing to work and a billion minds always comparing the services and quality of life available with what is available in the west. To elevate this entire billion to the higher end of the value chain white collared employment, requires huge investments in basic healthcare, primary secondary and tertiary education, infrastructure for roads,electricity, river water sharing, ecological conservation,High end R&D labs in niche segments, etc
RE:RE:RE:rupee appreciation
by saravana kodandapani on Jul 26, 2007 08:32 PM Permalink
While the magnitude of our population makes low value,low end job creation a priority for the govt, it is beneficial to the semieducated and semiskilled labour force to have some job instead of putting their brains to work and start an enterprise by themselves. Our country does not encourage high value and cutting edge technology entrepreunership if we make cut off ourselves with high end technology due to the cost of a astronomical dollar. There is no point in discovering the wheel all over again. Allowing the rupee to stabilize at its true value, cutting the inflation dramatically, and converting our economy to a high value economy should be our long term objectives while in the short term , subsidy, minimum price guarantee, tax benefits and domestic market protection can offset a major portion of the losses incurred. This is the price we pay to lift and ignite a billion minds on our way to becoming a superpower.
RE:rupee appreciation
by shashidhar biradar on Jul 27, 2007 11:14 AM Permalink
Girsih sir, US economy is 25 trillion $ and Indian economy is 1 trillion $
