Strong Re hits garment exporters hard
Moneycontrol.com, India
The dollar’s hammering is now starting to hurt garment exporters, and soon most exporters may prefer moving to low-cost producing countries like Bangaldesh and Vietnam, reports CNBC-TV18.
First it was the IT industry, which said that the rupee appreciation against the dollar would hurt margins and now it is the textile sector, which is crying foul. Garment exporters say they are running into losses, as they are working on 5-7% margins, compared to the domestic currency that has strengthened nearly 9% against the dollar.
Exporters say they don’t expect even bottomlines to be spared and see a likely erosion of 10-15%.
SK Saraf, Chairman, Federation of Indian Export Organisation says, “Once the buyer goes, we would face with double loss”
Textile exporters say that they have already seen a drop of more than 9% in exports to the US and the EU in the financial year that has just ended.
Besides, getting orders for the winter season from the US and the European Union will only get tougher as buyers are not ready to pay a higher price for Indian garments.
Buyers from the West are likely to shift to low-cost textile hubs like Vietnam, Thailand, Malaysia, even Bangladesh and Pakistan. To tackle the competition exporters would have to import cheaper raw material from these countries
Mohan Nihalani, President, Importers’ & Exporters’ Association says, “This trend is accelrating and we have seen exporters import fabrics from south east Asia, where it is cheaper but still most poeple are not accustomed to do that.”
Some exporters say they might start moving production to lower cost producing countries. However they do hope that the RBI and the Government will step in to control the rupee appreciation to avoid any more financial loss.
