Plastics export body calls for fund to manage forex risks

Suggesting various measures to help exporters of plastics items effectively counter the adverse impact of rupee appreciation, the Plastics Export Promotion Council (Plexconcil) has urged the Government to consider creation of a Fund to manage foreign exchange risks.
It is suggested that while a fund could be created, an insurance policy may also be provided against forex fluctuations.
Such risks, it is felt, could be managed through a body like ECGC or any other organisation the Government deems fit.
It is pointed out that as per DGCIS figures (for export of principal commodities for the period April-June 2007), a decline in export growth of about 12 per cent in rupee terms and about 2 per cent in dollar terms has been witnessed for plastic items.
According to Mr Nemish Syani, Chairman of Plexconcil, the EEFC accounts should be freed for any use, and the balances in the account should be freed for use both on current and capital accounts.
“Exporters must be allowed to earn interest, invest in fixed deposits, overseas shares and investments etc.”Focus-market scheme
The council has pointed out that all plastic processed items must be included in the focus-market scheme.
It is felt that since plastic process commands a huge export potential of over $200 billion, and with our share of this being less than 0.5 per cent, there was a strong case for inclusion of the items in the ‘Focus-product Scheme’ to encourage plastic processors who are largely in the SME sector.
The council is of the view that it was high time the Government reviewed allowing import of plastic scrap (not “waste”) as input for relevant plastic products. Mr Sayani said “this facility is available to our counterparts in Asia like China, Malaysia, Thailand etc, which places them in an advantageous position”.
The measure, it is felt, will help plastic exporters in certain major segments “to face the rupee appreciation more boldly”.
The major markets for the plastics sector have been China, the US and the UAE. While the UAE has shown a small positive growth rate, both China and the US have shown a substantial decline of about 42 per cent and 36 per cent respectively in rupee terms and 35 per cent and 31 per cent in dollar terms.
China, it is stated, largely imports polymers of propylene and ethylene. Admitting it was somewhat premature to comment on the effects of the appreciating rupee on exports, and employment in the plastics sector, the council is of the view that ill-effects were being felt in terms of production capacities being underutilised (retrenchments in future not ruled out).