Shipping companies expect the rising rupee to dent realisations. About 70 to 80 per cent of the income of the domestic liners is either in dollars or dollar-linked.

Consequently, when the greenbacks are converted into rupees, realisations will come down in real terms.

"The rise of the rupee will have a small impact on our company," Vijay K Sheth, managing director of the Great Eastern Shipping Company, said.

Concurs, H K Mittal, CMD Mercator Lines, "It will have a negative effect but the impact will be small."

Companies are not prepared to quantify the impact. However, the dominant view in most shipping companies is that if the rupee stays at current levels the impact will not be much.

"An appreciation of up to 8 per cent is something that shipping companies will be able to absorb. However, if the rupee were to rise to about Rs 40 to the dollar, then the situation is a cause for worry,' a senior executive with a shipping company said.

Indian ships carry cargo not only to and from India but also between different countries say between the Gulf and the US.

This is referred to in shipping industry parlance as cross trades. Consequently, the freight is either paid in dollars or linked to the dollar.

The companies can retain some part of their earnings in dollars while the rest has to be converted into rupees.

Even, the domestic oil refineries, on which the shipping companies depend to a large extent, pay freight rates linked to the dollar.

A very small portion of the income of the shipping industry comes in rupee terms. These are for carrying cargo within the Indian coast.

The shipping industry's fortunes have been impacted further at a time when industry leaders have been clamouring for the introduction of a tonnage tax regime.

The contention of the industry is that since it is burdened with a high corporate tax, it cannot compete globally.

This has led to a steady decline in its participation in the country's foreign trade. The migration to a tonnage tax regime based on a notional income will bring down the industry's tax burden to about 2 per cent from the prevailing 46 per cent. A report submitted by the Tata Economic Research Institute too has endorsed this demand.