Threadbare

Mumbai, May 2: Cotton textile exports have started feeling the pinch of rising rupee.

During the last financial year, exports of cotton textiles stood at $4.6 billion against the target of $5 billion. If the Indian currency continues to rise, exports during the current year will also be hit. The rupee has gained around 8 per cent over the last one year.

Cotton textiles is not the only segment that has been affected. According to exporters, the country’s export growth in all textile and clothing products has slowed compared with its competitors.

The US is now the world’s largest importer of textiles and clothing.

An analysis shows that while imports from India during the period ended February 2007 increased by 4 per cent, China’s exports rose nearly 29 per cent. Imports from Vietnam grew nearly 17 per cent, Pakistan 8.16 per cent and Bangladesh 20.64 per cent.

With exporters earning less rupees for every dollar exported, they have been compelled to either raise prices or take a hit on their margins. This has affected competitiveness.

Experts said as the domestic textile industry depends less on imports to meet its raw material requirements, the appreciation in rupee is not helping them.

“In India, cotton is the most integral part of the textile industry. About 70 per cent of Indian exports are cotton-based. We have only 3-4 per cent profitability on the exports of cotton. With the rupee strengthening against the dollar, we have lost our profitability,” said Prem Mallik, chairman of the Cotton Textiles Export Promotion Council.

Mallik said India’s major competitors in textiles and garments are China, Pakistan, Bangladesh and Indonesia.

Although currency appreciation has been observed among the Indonesian rupiah and Chinese yuan, the rise in rupee’s value has been the highest.