Falling Indian rupee lifts fortunes at textile, garment cos

Written by Banikinkar Pattanayak | New Delhi | Updated: Sep 3 2013, 18:12pm hrs
Indian textilesVardhman Group, which is running at full capacity, is also expanding, while Jyoti Apparels is expecting a 15% rise in its order book this fiscal. (Reuters)
A weak Indian rupee, may not be bad for everyone. Indeed, it has proved to be a boon for the countrys textile sector. After a 5% drop in the last fiscal through March to $31.7 billion, Indias textile exports are expected to grow 15% in 2013-14 on a pick-up in orders, senior industry executives said. Apart from the Indian rupee's depreciation against US dollar of over 21% since April, economic recovery in the US Indias biggest textile and garment export destination safety issues at Bangladeshi mills and soaring costs in China are aiding the rise in outbound shipments, they said. Textile and garment shipments accounted for 10.54% of Indias overall exports in 2012-13.

As domestic and export demand grows, Alok Industries, Indias largest textile company, is raising knitted fabric capacity by 67% to 50 tonnes per day. Vardhman Group, which is running at full capacity, is also expanding, while Jyoti Apparels is expecting a 15% rise in its order book this fiscal.

Other big players such as Gokaldas Exports, Trident and Shahi Exports are expected to post 10-20% shipment growth this fiscal as orders pour in from the US and Latin America, industry officials said.

Dilip Jiwrajka, managing director, Alok Industries, said: The sharp depreciation of the rupee and problems of complying with global safety standards by key competitor Bangladesh will be key to higher exports in 2013-14.

Alok Industries, which has a strong presence across textiles and garment segments in the domestic market as well, aims to raise export revenue by around 80% to R6,000 crore over the next two years. The company plans to commission the plant where the capacity addition is taking place in the third week of September, an industry source said.

SP Oswal, chairman, Vardhman Group, said the companys exports may grow 7% from over $300 million in 2012-13. Vardhman is in the process of adding capacities to cater for increasing customer base.

Vardhman is installing additional spindles at Budhni and Satlapur, which are expected to start production this fiscal itself. An additional 220 looms are planned to be commissioned by December. The company currently has over 9,27,430 spindles and 900 shuttleless looms, among others.

Indias textile exports rose 10.2% to $2.10 billion in the first two months of this fiscal, while garment exports grew 10.6% to $2.23 billion. Garment exports in June increased 12.1% to $1.24 billion, up from an 8.6% rise in April. Exports are expected to rise further due to the rupee depreciation and a steady rise in orders, executives said.

Overall textile production, however, gained 2.9% between April and June, showed the Index of Industrial Production data, suggesting domestic demand likely remained subdued while exports contributed much to textile sector growth.

Interestingly, the rupee depreciation has also prompted some buyers to shift from China and Bangladesh to seek better bargain on their purchases from India in dollar terms, said HKL Magu, managing director of Jyoti Apparels.One reason textile exports respond well to the rupee depreciation is the very low import content in the segment. Exports of cotton yarn, fabric and made-ups are doing very well, said DK Nair, secretary-general of the Confederation of Indian Textile Industry.

However, the governments ambitious target of raising textile and garment exports to close to $44 billion in 2013-14 will be missed in the absence of any major policy intervention in the form of higher export subsidy or availability of adequate and cheaper credit, some industry executives said.

The countrys overall textile and clothing exports, which also include shipments of cotton (raw and waste) and handicrafts, had hit Rs 1,59,570.56 crore ($34 billion) in 2011-12, up 26.4% from a year before. The government had set a $40.59 billion target for such exports for 2012-13 fiscal, which was missed.