Weak Re brings no relief to textile exporters

Written by Shaheen Mansuri | Mumbai, Nov 2 | Updated: Nov 3 2008, 06:01am hrs
The global financial malady has impacted the textile exporters fraternity in India . Exporters say that even though the rupee has depreciated to Rs 50 against the greenback, the global liquidity crunch will delay their payments from their customers in the US , Europe and other regions.

Says Manoj Suchde from Jal Exports, Of the Rs 11 crore exports of my company, dollar denominated payments are nearly 65%. Some of the exporters have shipped products to the US , but there are chances of orders getting cancelled due to the recession. Similarly, even if the order is accepted, there is a strong possibility of late payments from their customers in the US .

However, depreciation of the rupee would have boosted the competitiveness of exporters as their real income in rupee terms would have been on an upward curve, but the global recession has hit the fraternity since US-based customers are asking for huge discounts. Exporters say that this year again, they will not be able to meet their export target due to the unstable financial conditions. According to the Confederation of Indian Apparel Exporters (CIAE), the ready garments exports was previously (before the recent global recession) estimated to cross the $9 billion mark by the end of the current fiscal.

Amit Goyal, president of thr Confederation of Indian Apparel Exporters (CIAE) echoes the sentiments of the textile fraternity who are unable to reap the gains of the depreciating rupee. Goyal adds, Last year, when the rupee appreciated at Rs 38-39 against the dollar, exporters headed for hedging options and booked dollars at Rs 40-42. Now when the dollar has breached the Rs 50-mark, they cant reap the benefits. At the time of procuring orders, exporters found forward hedging of currency as a safeguard against an expected fall in the value of the dollar, but the situation is vice-versa today, said Goyal, adding that due to hedging currency risks, receivables for the exporters will be at Rs 40-42 despite the dollar breaching the Rs 50 mark.

Exporters are crying hoarse despite the rupee depreciating against the dollar. Due to economic instability globally and specifically in the US , many garment stores in the US are shutting down, informs Goyal. However, many exporters have even started receiving emails about cancellation of orders due to slowdown in demand.

However, there is an option for the exporters to divert their attention to smaller markets like the Far East , Japan and Australia , but even they are hit by the global market slowdown. Its a wait and watch situation for us now, says Goyal.