Indian textile exporters ponder benefits of rupee fall

The Indian rupee was marked at Rs. 61.66 on August 18, 2013 against the US dollar and has declined to Rs. 67.06 on September 04, 2013.

According to the industry representatives and analysts, the sharp decline of rupee would benefit Indian textile and clothing exporters by making the products more competitive in the long run.

Speaking to fibre2fashion, secretary of Confederation of Indian Textile Industry (CITI), Mr. DK Nair said, “The sharp decline of rupee has improved the export earnings of our textiles and garment sector by at least 4 percent because this sector uses negligible imported goods and exports over one third of its production.”

“Though rupee depreciation would always help this sector in the short run, over a period of time, production costs may catch up, diluting the advantage,” he opines.

Agreeing with him, Mr. Harminder Sahni, managing director of Wazir Advisors, says, “The rupee fall is a good news for garment exporters as it makes them earn better margins since it makes the process more competitive as compared to other exporting nations and thus more business may come to India.”

However Mr. Rahul Mehta, president of Clothing Manufacturers Associations of India (CMAI), says, “I do not think the sharp fall in rupee will improve margins very much.”

“Firstly, most exporters would have fully or partially covered their dollars in advance hence higher margins would not really apply. Secondly, even if exporters get the full benefit, it would not be long lasting as most buyers would try to renegotiate the contracted prices. What it will do is to make our products more competitive,” he concludes.

Last month, Government of India raised the textile and garment export target for the ongoing fiscal year 2013-14 to US$ 43 billion, from the earlier US$ 36 billion. In the last fiscal year, India’s overall textile exports stood at US$ 31.71 billion, of which the apparel exports contributed US$ 12.923 billion.  

Fibre2fashion News Desk - India