India's exporters are looking out for Euro-dominated trade opportunities due to strengthening of rupee and pressure on profit margins, according to a survey by the Federation of Indian Chamber of Commerce and Industry (FICCI).

The survey, conducted during the months of April and May 2007, drew responses from 304 companies representing sectors like automobiles, consumer durables, food and food processing, gems and jewellery, FMCG, textiles, handicrafts, metal and metal products, heavy engineering, pharmaceuticals and chemicals.

It said the confidence level of Indian exporters has been jolted due to the rising cost of raw materials, hike in interest rates and appreciating rupee.

Exports in segments such as textiles, gems and jewellery, tea, spices, leather and marine products are extremely price sensitive and the recent movement in the rupee's value has started impinging on their export performance.

Indian exporters surveyed by the chamber said if Euro is replaced as a medium of exchange for the dollar, there would be more stability in the prices and it would be easier for them to hold their position in the international market.

The small and medium enterprises unlike large enterprises neither have the option of reducing their cost burden nor have the knowledge about how to safeguard and hedge currency exposure using sophisticated techniques like the forward contracts, the survey pointed out.

It showed that while the adverse movement in the country's exchange rate is affecting a significantly high 75 per cent of the participating companies, just about 30 per cent of the participating companies have put in place or have resorted to a mechanism that provides cover for currency exposure.

About 82 per cent of the companies have stated that in their agreements with their clients they do not have a clause that allows revision of rates in case of a sizable adverse movement in the exchange rate.

The survey said the exporters are not viewing the recent strengthening of the rupee on account of RBI's hands off approach and non-intervention in the forex market as a short-term phase.

Rather, there is an apprehension that the rupee will continue to maintain its current level over the next few months.

Several companies have already started engaging their international clients and are negotiating for an upward revision in the prices for their products, a task, which they say, is extremely difficult.

In addition to an increase in prices, companies are also planning to enhance export volumes, as the demand conditions in the international market remain favourable.

Several exporters have also shown keen interest to hedge against the exchange rate risk using instruments like the forward contracts.