Sales of consumer goods have dipped by 30% due to escalating cost; several traders have suspended imports
As a direct, immediate impact of the falling rupee, there has been a decrease in the number of people going abroad only to bring products for resale in India.
Popularly known as ‘kuruvis’, these men from small towns and average households are hand-picked for such assignments by agents. On an average, at least 100 persons fly in and out of the city in a week to purchase such goods.
“For the past one week no one has brought in fresh imported stock of electronic goods, liquor and toys, as the rupee has continued to fall. The whole dynamics of the business has changed as it is no longer viable to spend on air tickets and purchase such goods. Many of the shops that stock foreign goods are turning away customers for want of products,” said a seller of imported goods in north Chennai.
Several traders who sell imported goods have suspended imports for the past few weeks. K. Palani, who runs a chain of imported goods stores especially for Koreans, said, “I am managing with stocks that I imported in July. I have already closed down two of my five shops. I may have to increase retail prices by at least 30 per cent to cope up with the falling rupee value,” he said.
The prices of consumer goods, which are already costlier by 5 per cent this month, are set to rise by 7 per cent from September 1. The sales have dipped by 30 per cent because of the escalating cost.
S. Jayaprakash, proprietor of a chain of consumer goods showrooms, said nearly 85 per cent of electronic items, such as LED/LCD televisions, refrigerators and even hair dryers are imported from countries such as China, Germany and Thailand. Indigenous production of small products such as pedestal fans and gas stoves has also come down.
Kannan Bhaktavatsalam, a resident of Perungudi, said the falling rupee was a major cause of concern. “Prices have been skyrocketing for the past few years. Salary hikes by a few hundreds do not mean anything any more. Every time I go to a shop, there is an increase in the retail price. The proposed hike in diesel prices would mean a harder time ahead,” he said.
While only a small section of the population will be affected by a shortfall in the supply of such goods, increases in prices of palmolin oil and pulses meant for the Public Distribution System could be a cause for concern for the State government. “If this trend continues there could be a hike of around 20 per cent. The food subsidy bill may increase and cause an additional burden to the exchequer,” said a government source.
Palmolin is imported from Indonesia and Malaysia. Thoor dhal, urad dhal and Kabuli channa are imported from Myanmar. “Already there is a 15 – 20 per cent increase in the wholesale prices of pulses. The appreciation of the dollar has led to a steep increase. The impact of this increase would be felt in the retail market only next week,” said Manish Paramar of the Madras Kirana Merchants Association.
For a city that has two ports, the downslide in the value of the rupee will translate to a dip in exports as well.
“Around 70 per cent of Indian exports are dependent on imports. So when imports are hit, exports too will be automatically hit. The thrust to exports that the government is trying to give may not come through,” said an industry source.
Every month, around 1.2 lakh containers are moved through the Chennai Port. Of this, around 50 per cent constitute imports. “Nearly 15 – 20 per cent of imports are estimated to be trading products like apples, cosmetic goods and Chinese products, and another 20 per cent dolls would comprise batteries, electronic items, games, mobiles,” he said.