Nasscom says not much gains from falling rupee in short term
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Nasscom says not much gains from falling rupee in short term

Last Updated: Wednesday, June 27, 2012, 00:07
 
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Nasscom says not much gains from falling rupee in short term
Chennai: Falling rupee may have got the IT industry windfall gains but industry body Nasscom feels weakening of the Indian currency will benefit companies like TCS and Infosys only in the long run.

Speaking to reporters on the sidelines of 'Surge 2012' seminar organised by the industry body, Nasscom President Som Mittal said, "The rupee depreciation helps us in the long term because it ensures competitiveness for the industry.

"But in the short run, we do not really gain because as an industry we do not want currency movement to be in the centre of loss or profit. Because most people want to get what they have projected in terms of pricing."

Mittal added that a stable currency is now required and expressed hope the government is working on the issue.

"We need a stable currency rather than guessing how far dollar and rupee will be. We hope the government will bring more stability," he said.

Usually, a depreciating rupee helps IT companies improve their margins as they earn revenues in dollars. However, with most companies hedging their earnings well in advance, the current fluctuation may not make huge difference.

The rupee has depreciated as much as 15 per cent from its Rs 50 level late last year.

Experts suggest that one per cent depreciation in the rupee has a positive impact of about 25-40 basis points on the margins of IT companies.

Nasscom has expressed concern about currency volatility in the past as well, saying sudden fluctuations hamper the planning process for companies in the USD 100 billion Indian IT-BPO sector.

To a query on expectations from the government, he said stability in policies was needed because it would build trust between government and the business.

"I think this is the time we need the government to offer some support -- not in terms of any incentives, but as much as stable policies and more positive relationship between business and industry," he said.

Amid growing perceptions of policy paralysis, top industry leaders have also expressed anguish over the current state of affairs in the economy, saying that India's image seems to have taken a hit.

Top business leader N R Narayana Murthy, co-founder of home-grown global IT giant Infosys, had said, "Over the past 3-4 months, India's image seems to have suffered. As an Indian, I feel very sad that we have come to this state."

Another IT major Wipro's Chairman Azim Premji said "we are working without a leader as a country. If we do not change, we would be down for years."

PTI




First Published: Wednesday, June 27, 2012, 00:07


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