The recent fall of the rupee against the US dollar is expected to help alleviate some of the pain Tirupur-based textile firms have suffered in the past year after the Indian currency rose and made their goods more expensive to sell to overseas buyers.
Tirupur, which exported Rs11,000 crore worth of goods in 2006-07, reported some 15,000 job cuts in the past eight months on account of a loss in orders following the rupee’s appreciation. As a result of this, and also because each dollar translated into fewer rupees for much of 2007-08 compared with previous years, export earnings from the textile town are likely to come down to Rs9,500 crore in 2007-08.
However, the rupee has fallen 1.7% against the dollar since the start of 2008 and exporters say they are hopeful of winning more orders, even as they face stiff competition from China, Pakistan and Bangladesh.
“We hope that the rupee remains at this level (higher than Rs40 against the dollar)”, said A. Sakthivel, president of Tirupur Exporters’ Association, an industry body. “The rupee’s appreciation will help to get winter orders.”
The Indian rupee appreciated by as much as 12% between January and December 2007, hurting revenues as well as profits of textile firms. The appreciation of the rupee reduces dollar earnings of exporters, while a depreciation has the opposite effect. However, the Indian rupee touched a yearly low of Rs40.73 to a dollar on 17 March as against Rs39.42 at the start of the year.
Tirupur, which traditionally focused only on cotton-based textiles, has recently diversified into winter clothing with materials such as cotton viscose and lycra. Winter orders, which are completed between April and August, constituted only 35% of the Rs11,000 crore worth of exports last year, according to the association.
The Prem Group, which hopes to export Rs100 crore worth of garments has recently secured a big-order from a European buyer. “The buyer shifted from China. His reason is that the Chinese currency is appreciating much faster”, said D. Prem, chairman of the Prem Group. The Chinese renminbi has gained 4.23 % in the period that the rupee has fallen 1.69% since the start of the year against the dollar.