Interviews
Rupee rally causes heartburn for textile & clothing exporters
07 May '07
3 min read
During this period, INR appreciated by 4.45%, as against 3.5% for Chinese Yuan and less than 1% for Mexican Peso. In fact, currencies of Pakistan (1.3%), Sri Lanka (5.5%), Indonesia (2.3%) and Taiwan (2.26%) depreciated considerably during this period.
After an impressive growth for about two years in quota-free markets, the country's exports of textile products are already waning. The intake by USA, which is the largest market for our T&C products, has declined by over 4% in value terms during January-February 2007, as compared to January-February 2006. It is after several decades that USA's imports of textile products from India have shown a negative growth this year.
It is also pertinent to note that the deceleration in exports is hitting where it hurts the most. Clothing which is the most value added and labour intensive segment in the textile chain has registered a negative growth of over 7% in the US market. Similarly, in manmade fibre products in which India has tremendous growth potential, but an insignificant presence in the US market at present, our exports have declined by nearly 21%.
We do have some supply side problems relating to labour laws, transaction cost, infrastructure etc. But all these problems were there even during 2005 and 2006, when our exports registered impressive growth. What is new is the steep appreciation of the Rupee during the last few months, which has accelerated further during the last couple of weeks.
The high export orientation and extremely low import intensity of the T&C industry make it very vulnerable to currency appreciation. And the situation worsens when our competitors have lower appreciation or actual depreciation, as is the case now.
While contracts negotiated earlier will now have to be executed with low or negative profits, for new contracts our offers are becoming totally uncompetitive. The situation for other export products would also be critical, though the degree of adverse impact would vary in accordance with the import intensity of the respective products.
We would request you to take immediate measures to arrest the rally of the Rupee through appropriate intervention by RBI. If this is not possible for any reason, measures will have to be taken to compensate our exporters in some form, for the loss from currency appreciation.
After an impressive growth for about two years in quota-free markets, the country's exports of textile products are already waning. The intake by USA, which is the largest market for our T&C products, has declined by over 4% in value terms during January-February 2007, as compared to January-February 2006. It is after several decades that USA's imports of textile products from India have shown a negative growth this year.
It is also pertinent to note that the deceleration in exports is hitting where it hurts the most. Clothing which is the most value added and labour intensive segment in the textile chain has registered a negative growth of over 7% in the US market. Similarly, in manmade fibre products in which India has tremendous growth potential, but an insignificant presence in the US market at present, our exports have declined by nearly 21%.
We do have some supply side problems relating to labour laws, transaction cost, infrastructure etc. But all these problems were there even during 2005 and 2006, when our exports registered impressive growth. What is new is the steep appreciation of the Rupee during the last few months, which has accelerated further during the last couple of weeks.
The high export orientation and extremely low import intensity of the T&C industry make it very vulnerable to currency appreciation. And the situation worsens when our competitors have lower appreciation or actual depreciation, as is the case now.
While contracts negotiated earlier will now have to be executed with low or negative profits, for new contracts our offers are becoming totally uncompetitive. The situation for other export products would also be critical, though the degree of adverse impact would vary in accordance with the import intensity of the respective products.
We would request you to take immediate measures to arrest the rally of the Rupee through appropriate intervention by RBI. If this is not possible for any reason, measures will have to be taken to compensate our exporters in some form, for the loss from currency appreciation.
Confederation of Indian Textile Industry
Popular News
Leave your Comments
Esteemed Clients
-Ltd..jpg?tr=w-120,h-60,c-at_max,cm-pad_resize,bg-ffffff "Thermore (Far East) Ltd.")
.jpg?tr=w-120,h-60,c-at_max,cm-pad_resize,bg-ffffff "Telangana State Industrial Infrastructure Corporation Limited (TSllC Ltd)")
.jpg?tr=w-120,h-60,c-at_max,cm-pad_resize,bg-ffffff "Taiwan Textile Federation (TTF)")
