The Hindu Business Line : `Rising rupee could cause flight of deals'

THE Electronics and Software Export Promotion Council (ESC) has said that a continuously appreciating rupee against dollar would have an adverse impact on the software and IT-enabled services exports from the country.

More than 60 per cent of the software and IT-enabled services exports are destined to the US. There is likelihood that export realisation in rupee terms may come down, even if exports stay buoyant, according to ESC Executive Director, Mr D.K. Sareen.

"What is worrisome is that the hardening rupee may wipe out the competitive advantage of India as an outsourcing destination due to labour arbitrage. This may compel the US companies to look at other options such as the Philippines, Ireland and Russia for software development," Mr Sareen said.

He said that the council had advised its members, particularly Small and Medium Enterprises (SMEs) to go for multi-currency cover for hedging the risk due to currency fluctuations.

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`Rising rupee could cause flight of deals'