India : Billing in euro - Exit door to rupee appreciation

After months of bearing the adversities brought about by rupee appreciation, the Textile ministry has finally come up with a suggestion, which may not have any guaranteed outcome but which can surely be a move towards improving the present deplorable conditions of the textile exporters.
The ministry has recommended a flip over to billing in euro currencies to counteract the unfavorable impact of declining dollar value. Government on its part is also trying hard to work out a new relief package that will enable exporters to meet the mark of US $25.1 billion set for this fiscal year.
Exporters in Tripura have already started billing their clients in currencies other than dollar. Additionally, they have also resorted to measures like avoiding exposure to foreign exchange, increasing the value of both the product as well as the cost, emphasizing on short term contracts and if the need be, to sell their products in domestic market itself.
The textile ministry asserted that rupee has depreciated 0.50 percent against euro in the period between October 2006-2007 and it will therefore be advantageous for exportersto shift their billing from dollar to euro or even pound.
Exporters on the other hand are of the opinion that switching to euro is an impracticable and unacceptable idea since about 75 percent of the textile exports are billed in dollar and in spite of its depreciation exporters are reluctant to change terms of invoicing. On the contrary, importer who were not yet into billing in dollars are now finding it a lucrative prospective.
It is hoped that the relief package for exporters will be out by December because India’s export contribution in global trading is declining rapidly accounting for a meager 3.68 percent in a total of $350 billion in 2006.
In a period of six months from December last year to May 2007, textiles showed a declining growth in three months while the growth of ready-made garments dropped in four months.