Re impact: Special package for labour-intensive sectors sought

Re impact: Special package for labour-intensive sectors sought
Hindu Business Line, India
M.R. Subramani
Vishwanath Kulkarni

Bangalore, Oct. 30 The Commerce Ministry has approached the Finance Ministry seeking a special package for the plantation, leather, handicraft and textile sectors to tide over the problems caused by the rupee’s appreciation against the dollar.

“I have spoken to the Finance Ministry and approached the Prime Minister on the need to work out a package for the labour-intensive sectors,” said Mr Jairam Ramesh, Union Minister of State for Commerce.

The package has been sought for three reasons. Firstly, these sectors are labour intensive. Secondly, they are competing in a price-sensitive atmosphere, and lastly, these sectors are not dependent on imports

“So far, we have said nothing against the appreciation of the rupee. Enormous amount of capital inflow is taking place and we cannot control it. We have to instead think of a way to protect our price-sensitive sectors,” said Mr Ramesh, who was here in connection with the Karnataka Planters’ Association annual conference and the Coffee Board’s exports award function. Asked what sort of package would be extended to these sectors, the Minister said, “We would be offering them pre-shipment and shipment credits at lower rates. We would also be lowering credit for packaging. These measures would give these sectors some breathing space”.

Badly hit
While tea and spices have been affected by the declining dollar, sectors such as leather, textiles and handicraft were feeling the heat. “We are competing against the Chinese in textiles and handicraft and countries such as Vietnam in leather and plantation,” he said.

Within the plantation sector, tea and spices have been affected badly, whereas the coffee industry has so far not felt the effect.

“The coffee sector has not felt the impact of the rupee’s appreciation because the commodity’s global market is witnessing an uptrend in prices,” said Mr G.V. Krishna Rau, Chairman of the Coffee Board.

While the rupee has gained nearly 12 per cent from 43.5 to 39.5 against the dollar, coffee prices have increased by 15 per cent. “Therefore, there is a net increase of three percentage points,” Mr Rau said.

But coffee growers are losing Rs 600-800 per 50-kg bag of arabica parchment in view of the rupee’s gain, said the Upasi President, Mr C.P. Kariappa.

“So far, the export figures do not point to any major decline, while the value realisation is also good,” Mr Ramesh said.

Coffee exports from January 1 to October 29 stood at 1.91 lakh tonnes compared with 2.177 lakh tonnes in the corresponding period last year.