Engineering exports, which grew by 18% even during the economic meltdown touching $40 billion, have decreased 22% in the first six months of the current year. Rajat Srivastav, regional director of EEPC India told FE We will call upon the RBI to launch a stable currency regime as frequent fluctuations in foreign exchange are making operations difficult for engineering exporters. There is a long gestation period required for engineering exports and it is impossible to trade if foreign exchange fluctuates quite often. Rupee appreciation makes exports uncompetitive and thus a need for a stable currency regime. This will also be helpful for non-engineering exports.
Srivastav said instead of trading in dollar or pound, RBI should allow engineering exports in the Indian rupee. To start with, this can be launched in the Saarc countries for example in Sri Lanka and Bangladesh. In such transactions, no foreign exchange is involved though banks may be asked to complete the necessary formalities.