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Appreciation of rupee concerns Indian textile exporters
19
Oct '10
The rise in the value of rupee against the US dollar has affected the textile exporters of the country. The value of rupee has increased by 6.3 percent over the past two months, after the foreign institutional investors (FIIs) have made their way to India. Around two months ago, the exchange value of rupee was equivalent to Rs 47 per dollar which dropped down to less than Rs 44 towards the end of last week and stopped at 44 levels.

The fall in duty drawback rates, rising yarn prices, decreasing accessibility of yarn in local market and the current surge in the value of rupee are causing serious challenges for the textile exporters. A special incentive of two percent has also affected the business potential of the Indian garment exporters. The apparel exports have gone down by seven to eight percent since April, 2010 and if the trend continues to prevail then the industry has to opt for serious measures. This situation could also affect the employment in the industry.

The Indian government has not taken any measure to fix the price of rupee, so far. The government can control the inflow of FII investments into the country and put some limit such as minimum one-year lock-in period for FII money. The delay of raw cotton export till January 2011 and the prohibition of yarn exports can help in meeting the domestic requirements of cotton.

The garment exporters have been instructed to raise the prices of their garments. The buyers are expected to accept the increased prices as most of the competing nations like Bangladesh, Vietnam and China have raised the prices of their textile products owing to the rise in cotton price in the global market. The exporters can book forward cover for their products on a month-to-month basis to get away from the uncertainties.

Fibre2fashion News Desk-India

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