Garment exporters worst hit due to rupee appreciation
Financial Express, India
New Delhi, Dec 31 The garment industry was the major sufferer of all the domestic industrial segments because of the continued appreciation of rupee in dollar term that is almost 13% during 2014.
Despite announcemnt of various sops such as expansion of technology upgradation fund (TUF) for the next five years and the increase in DEPB rates by the government, readymade garment exporters were worst hit by the phenomenon vis-a-vis their competitors in international market.
Other crisis that hit the profit margins of the textile manufacturers were high interest rates and repeated increase in the cost of inputs.
“The year was full of tensions for the textile industry. A 14% appreciation in the Indian currency was not only the one factor that hit the bottomlines of the industry, but the banks also increased the interest rate up to 40% on the term loans being extended to textile Companies also,†the chairman of the Confederation of Indian Textile Industries, PD Patodia told FE.
Patodia said, “Of the total production in the industry, 75% is export oriented and in dollar terms that is the main reason for the slow down in the area.â€
Commerce minister Kamal Nath also conceded that the segment recorded a 22% decline exports during April-October 2014 period as against the 15% to 20% growth in the preceeding years.
Nath added when there is decline in export rates, the items meant for exports come in the domestic market creating over-supply conditions leading to unexpected and rapid erosion of competitiveness and profits in the industry.
