The Hindu Business Line : Strong rupee: Textile exporters go for fabric imports from China, other neighbours

Home Page - Textiles
Industry & Economy - Exports & Imports
Money & Banking - Forex
Strong rupee: Textile exporters go for fabric imports from China, other neighbours

Smaller players relying on local inputs are the hardest hit

Anil Sasi

New Delhi, July 7 In an all-out effort to soften the impact of the hardening rupee-dollar equation, the bigger Indian textile and apparel exporters are going in for increased imports, especially of yarn and fabrics, from neighbouring China, Pakistan and Sri Lanka. Other measures include denominating a significant portion of the total export contracts in euro or other currencies and covering the US dollar in the forward market, besides trimming production costs on a war front to stay competitive in the export market. Export firms are also increasingly looking at ramping up exposure in the domestic market to hedge business risks.

According to latest Government estimates, import of cotton yarn and fabrics from Pakistan witnessed an increase of 72 per cent during April-December 2006, while imports from Sri Lanka were up 52 per cent. Manmade filaments and spun yarn imports from China were up 23 per cent during the same period.

Gokaldas Exports Ltd, among the largest garment exporters, is countering the increasingly unfavourable rupee-dollar equation by ensuring sizeable imports, Rs 350 crore for 2006-07, which is about 34 per cent of the annual turnover of Rs 1,034 crore. The company is also denominating 10 per cent of the total contracts in euro currency, according to industry sources. It is covering a good portion of the US dollar in the forward market and trying to improve realisations by stepping up productivity through cost-cutting measures. Gokaldas is also looking at tapping the domestic retail market with a targeted turnover of around Rs 100 crore during the current fiscal.

Terry-towel exporter Welspun India Ltd is taking a slew of measures to mitigate the currency risk and has hedged close to a quarter of its annual sales for the current fiscal at Rs 45 to a dollar, besides initiating cost containment initiatives, it said.

“The small and medium enterprises are the ones that are most severely hit due to rupee appreciation. While larger players are in a position to offset the impact of the rising rupee on their exports through cheaper imports, SMEs suffer on this count as almost all of them source local inputs,” an industry player said.

More Stories on : Textiles | Exports & Imports | Forex

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Raja wants BSNL tender reviewed; ‘rates too high’

RCom, Qualcomm bury differences, in new tie-up

One year on, ‘Nathula Pass’es more benefits to tourism sector

Strong rupee: Textile exporters go for fabric imports from China, other neighbours

‘Mining policy should ensure that ore deposits are economically liberated’

FIMI opposes ad-valorem royalty on minerals

At 15000, Sensex stocks aren’t more expensive