Trade sources said Indian exporters have now devised three strategies to deal with the situation. They have started bypassing vendors in the UK for supplies to countries in the European Union. This would allow them to deal with the importers there directly.
Indian exporters are also gearing up to raise prices of their apparel products in next year’s contracts to compensate for the fall in the pound. Thirdly, exporters are re-negotiating for receivables in dollars instead of pounds.
Indian apparel exporters are convinced that the re-negotiated terms would protect them from any further fall in the pound without affecting their trade with the UK, which contributes nearly 11 per cent of apparel exports. As the pound (GBP) has fallen evenly against other major global currencies, exporters anticipate no problem in arriving at re-negotiated terms with importers in the UK.
“A sustained fall in the GBP would certainly affect our business with the UK and the rest of the Europe,” said Rahul Mehta, president, Clothing Manufacturers Association of India (CMAI). “Indian apparel exporters would start negotiating directly with importers in the EU other than the UK. Export contract terms would be re-negotiated. Also, Indian exporters would raise prices of their apparel.”
A number of apparel importers in the EU are getting consignments delivered to their headquarters in the UK for transportation to other countries in the region. While the actual volume of exports to the EU through UK was unavailable, trade sources estimated the volume could be in the region of 25-30 per cent.
The GBP had crashed after the United Kingdom voted in favour of an exit from the European Union in June.