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Rising rupee ensnares textile exporters' profits

Apr '07
It has been two weeks now and the rupee value continues to climb against us dollar with no signs of abatement, which is cause of concern for Indian textile exporters. As time passes, these concerns may come true in the form of hitting exporters below the belt as several of them spoke to fibre2fashion on the same.

Stating that export earnings may not be immediately affected, Sunil Khandelwal, CFO, Alok Industries said most of the exporters have covered themselves for one to two months i.e. till June and July.

If nothing is done after these months, exporters may find difficulty in getting repeat order i.e. long term views from buyers.

If we talk of India specific, it will affect the exporters. But they hope that value of currency increases and they get the best deal.

Drawing parallel with China, Akhil Jindal, President, Welspun India, said that it has affected everyone adversely. Rupee has been appreciated by over 8 percent while the Chinese currency has remained flat during the corresponding period.

The currency of China in any way has been under valued by 30 percent, which makes tough for exporters to compete with China on pure pricing parameter.

The art is to move up in the value chain & offer products at premium zone. India should not have direct pressure from China.

Expressing fears of denim exports coming to a standstill, Bhavik Pandit, Finance Controller, Aarvee Denims & Exports Ltd, stated that because of rupee appreciation, margin that was there previously has vanished. With this rupee value it is not a profitable business proposition. If rupee remains at prevailing level for times to come, exporters will not be inclined to export or export business will suffer a lot.

In case of importers, it is reliably leant that no doubt appreciation of rupee goes well with their scheme of things, however, they wonder how long this 'spell' remains.

Importers, who have placed orders during this phase of rupee appreciation, are definitely going to make a kill of the situation.

Fibre2fashion News Desk - India

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