The sharp devaluation of Indian rupee against the US dollar has given no reason to smile for the sports goods exporters based in Meerut, Uttar Pradesh.
One would understand that devaluation would have brought windfall to exporters with higher profit margins, but the labour intensive industry is in fact weighed down by the spike in input cost, most of which is imported. Meerut sports goods industry is estimated to clock business worth Rs 1,500 crore in the current fiscal, including Rs 600 crore worth of exports.
"Our industry has taken hit of almost 20 per cent due to the devaluation of Indian currency over the last few quarters," All India Sports Goods Manufacturers Federation president Punit Mohan Sharma told Business Standard.
Meerut is a leading sports goods hub with over 1,000 big and small units manufacturing cricket and athletics gear, table tennis tables, health and gymnasium equipment, football etc. They export sports gears to all Cricket playing nations, besides Germany, France, Africa and West Asia. Another major sports goods centre in North India is Jalandhar.
"Most of our input items are imported from Singapore, China, Japan, England and Australia. Imported items account for about 50 per cent of the finished product," he informed.
Even the wood (known as English willow) used to manufacture a good quality cricket bat used in domestic and international matches are imported from English.
Primary imported items used as raw material or packaging include, paint, thinner, varnish and other petroleum-based products.
"Any gain in our export value is more than offset by the spike in our raw material cost. Besides, all our older orders have now dried up. Now imported have started to renegotiate rates for fresh consignments realising devaluation in our currency," Sharma lamented.
This year, Indian Rupee has slid over 20 per cent compared to Dollar. Rupee, which stood at about Rs 55 to a US Dollar on January 1, 2013 has been hovering around Rs 67 to a Dollar for quite some time now.
"Firms with old inventories might benefit to some extent with the fall in value of Rupee. However, the net effect is not encouraging due to costlier imports of raw material," Vinod Kumar Agarwal of Excellent Sports Industries, Meerut noted.