Textile industry must cope with rupee appreciation - CITI

02 Oct '07

4 min read

Indian textile exports may fail to reach the set target of $25 billion as rupee appreciation and lower investments are taking its toll. It is expected to face a shortage of 16 percent in the current financial year.

Experts estimate that exports value this year will touch around $20 - $21 billion, up four percent compared to last year's revenue of $19.7 billion.

Industry players are concerned with this negative growth especially in the garment sector, which has happened for the first time in several years.

Fibre2fashion contacted Mr D K Nair, Secretary General, Confederation of Indian Textile Industry (CITI), in an attempt to find the justifications behind this negative growth in exports for the garment sector. He said, "The major reasons are the fast and steep rise in the value of rupee and the increase in interest rates on loans. The appreciation of rupee is especially high with reference to US dollar and our exports have shown negative growth particularly in USA and in other countries where our contracts are in terms of US dollar."

Talking about lesser amount of foreign investments in the textile sector, Mr Nair said, "Until recently, our textile and clothing industry was not attracting much investment even from Indian companies, especially the larger ones. The reason was the perception that this industry had limited growth prospects. This opinion has now changed substantially and domestic investments are now pouring in. However, FDI continues to be low because the improvement in the investment climate has not percolated well to overseas investors. The image of the country as a potential destination for overseas investment in labour intensive manufacturing industries is still not very positive. Our infrastructure also needs considerable improvement before significant FDIs can be expected in industries like textiles."

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