Encouraged by the Union commerce ministry?s announcement of sector-specific relief for exporters to tide over the currency crisis, the Council for Leather Exports (CLE) has called for a foreign exchange fluctuation allowance (FEFA) to the extent of 6.22% of f.o.b. value, till the rupee settles at the pre-March level against the dollar. It wants this facility in addition to the existing duty drawback rate.
The rupee has appreciated against other currencies as well. The euro weakened against the rupee from 59.71 a rupee in August 2006 to 54.51 a rupee in March 2007, pound sterling from 88.72 a rupee to 80.43 a rupee and yen from 39.66 a rupee to 33.24 a rupee in the same period.
CLE data shows that 92% of the leather and leather products exporters are in the small-scale sector and the industry employs over 2.5 million people. The currency crisis is jeopardising the livelihood of these people, according to the chairman of the council, Mukhtarul Amin
?We welcome the announcement by the commerce minister to provide sector-specific relief to the exporters. We are hopeful that the support will help the leather export industry, which is in doldrums today. In spite of the support measures announced by the Union government, the continued appreciation of the rupee has decreased export realisation and the leather and leather goods industry is suffering,? he said.
He said that about 92% of the exporters were in the small sector having a turnover of less than $5 million. They constitute 46.71% of exports. ?All these units are in the SME sector with wafer thin margins and are significantly affected by the appreciation of the rupee. Large units with more than $15 million turnover, accounting for only 20.36% of the total exports, are seriously affected as they are competing in the price sensitive segment. Besides, the sector has employed about 2.5 million workers, whose employment is seriously jeopardised,? Amin said.