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Rising rupee halts buoyant trend in man-made fibre textiles exports

May '07
The buoyant growth of 24% witnessed in exports of Indian man-made fibre textiles during the year 2006-07 which is estimated to cross US$ 2400 million mark may fizzle out in the wake of appreciation of Rupee and the ambitious target of US$ 2921 million set for the current financial year looks a distant possibility in the present scenario according to Shri Sanjeev Saran, Chairman of The Synthetic & Rayon Textiles Export Promotion Council.

The elaborate promotional strategy put in place by the Council after a lot of thought to achieve the ambitious target would come to naught if the sharp and sudden 9% appreciation of the Indian rupee vis-à-vis the US$ is not addressed quickly. Shri Saran added that the competitiveness of Indian man-made fibre textiles in the international market has been significantly eroded, creating panic among Indian exporters.

The exporters cannot pass on the burden of hardening Rupee to the buyers because contracts have already been negotiated and prices cannot be reworked. What is more, all new contracts are coming to a standstill. To make matters worse, bulk of Indian man-made fibre textile exports are invoiced in the US$. Moreover, Indian exports consists of mainly commodity items and medium to lower end items where margins are thin. The small and medium exporters who form majority of the members of the Council are not equipped to handle such situations and will have a very tough time according to Shri Saran.

Shri Saran also pointed out that during the last three months currencies of competing countries like China and Indonesia remained almost unchanged; while currencies of Korea and Thailand moved up in the range of 1-3% only; making the position of Indian exporters untenable in the international market and resulting in diversion of business.

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