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Greek debt crisis worries India, Pak textile sector
Jul '15
As the Greek debt crisis continues to fester, its possible repercussion in the European economy is beginning to worry the textile sector in India and Pakistan. In 2014, India exported textiles worth $45 million to Greece. But with the Euro now depreciating against the US dollar and the Indian rupee, the textile sector fears that exports to Eurozone will be badly hit, according to media reports.

Minister of state for finance, Jayant Sinha warned at the weekend that sectors with high exposure to the European market could suffer an impact. The European Union is one of the largest export markets for leather and textiles, and any decline in the strength of the Euro will make an already unfavourable situation worse for exporters.

The Eurozone constitutes almost 48 per cent of the Indian textile export market and constitutes 60 per cent of the leather export market.

According to a trade body official, there has been a decline of 10-15 per cent decline in Indian exports from textile and leather sectors ever since the uncertainty over Greece began to unravel five months ago.Textile exports alone in the last five months have seen a decline of around 5 per cent, exporters say.

The textile sector in Pakistan also has similar fears given that the country’s textile sector is one of the biggest trading partners of the EU.

According to financial analyst, the Euro which has shed 15 per cent against Pakistani rupee over the last 12 months, has resulted in a depressed demand as the foreign imports by EU customers become expensive. Weakening demand from Euro zone in the backdrop of looming Greece debt crisis is likely to dent exports prospects for the country and region, he added.

Investors have been advised to keep a watchful eye on the developments on Greece debt crisis before building a position in the textile sector.

The Greek economy accounts for only two percent of the EU’s GDP, but any news on the country is causing a ripple effect in the business world. While most are knee-jerk reactions, the possible impact of paying a six billion Euro loan could potentially hurt more than it is anticipated. (SH)

Fibre2Fashion News Desk – India

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