The textiles industry, which has been struggling due to increasing competition from the neighbouring countries like Bangladesh, Indonesia and Vietnam, coupled with rising imports into India and other domestic issues like GST, is now feeling the pinch of a strengthening rupee. The industry is almost ruling out the possibility of achieving its total export target of $45 billion in the current fiscal. Speaking to FE, Sanjay Kumar Jain, chairman, Confederation of Indian Textile Industry (CITI), said: “The exports were down 40% in October, followed by 13% in November. In December too, the exports came down sharply. If the trend continues, the projected textile export target of $45 billion in the current fiscal will be clearly unachievable. The industry may even find it difficult to attain last fiscal’s export of $40 billion.” According to him, “While rupee appreciation is one major factor, another threat looming is a further rise in cotton prices, which has gone up from Rs 37,500 a candy in November to Rs 41,500 now. Given the fluctuation in both the rupee and cotton prices, exporters are unable to take orders or fix any price point to do jobs.” Textile exports from India include ready-made and knitwear garments, cotton yarn, fabrics, made-ups, handicraft items, man-made yarns, fabrics and jute products, among other items.
S Sakthivel, former president of Tirupur Exporters’ Association and chairman of Poppys Knitwear, said, “We are suffering. The rupee appreciation over the last few months will certainly impact our exports as well as bargaining power. Though orders are flowing in, exporters are not able to fix an exact rate due to rupee appreciation. With severe competition from neighbouring countries on prices, the rupee appreciation will leave us in the lurch.” The industry is already burdened with issues such as duty-drawback and GST rates, he added.
A senior official of TEA told FE: “An appreciation of every one rupee against dollar will see Tirupur exporters losing Rs 35 crore a month on their total monthly exports of about Rs 2,300 crore. When it comes to all-India level, the loss is estimated to be around Rs 150 crore a month.”
According to the TEA official, it is estimated that total ready-made garment exports from India has declined to Rs 78,966 crore in the April-December 2017 period as compared to Rs 83,430 crore in the same period of last fiscal. Of the total exports, exports in dollar terms are estimated at 55%, in Euro at 30% and in Pound Sterling at 12%.
The official further said that out of total exports from Tirupur, nearly 10% of the big exporters garner 50% of total export value while 90% of small scale exporters account for the remaining 50%, and the impact of rupee appreciation will be more severe on the SMEs.