Euro may force cos to rethink on pricing

MUMBAI, NOV 14: The introduction of the Euro currency from January 1, 1999, is likely to put pressure on the prices of Indian exports to Eur...

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MUMBAI, NOV 14: The introduction of the Euro currency from January 1, 1999, is likely to put pressure on the prices of Indian exports to Europe, especially in sectors like textiles.

According to a presentation made by Deutsche Bank, the largest German bank, to Indian corporates on Saturday, the introduction of the euro will force corporates to rethink on their pricing, distribution and packaging in the European market. "There will be a downward pressure on prices as the existing price variation within different European countries becomes apparent and obvious. This would require Indian corporates to rethink on their distribution and pricing strategy," said Deutsche Bank’s regional EMU project co-ordinator Ashok Kumar.

Apart from textiles and garments, India has large European regional exposure in leather, machinery, bulk drugs etc. The conversion to a single currency will throw open new avenues of competition and countries in East Europe are already gearing up to take advantage of the transformation to thesingle currency mode, said Deutsche Bank officials.

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"The introduction of the single currency will enhance price transparency and boost competition. This will lead to opportunities for companies that recognise the need to realign their business strategies to reflect this new environment. It will also create significant challenges for those that are not fully prepared," he said.

Since the European Monetary Union (EMU) will create a single economic region, companies will have to shift from a national to a regional approach to pricing. In addition, because products will be priced in the euro rather than the legacy European currencies, pricing strategies as well as marketing will have to be adjusted to ensure products can be sold competitively in all markets of the euro zone.