Synthetic textile industry on a cusp of turnaround over rupee slide

Depreciating rupee to make India's import costlier and export beneficial

Beset by a rise in imports, synthetic textile manufacturers are betting on the rupee’s depreciation for a turnaround in their fortunes after the September quarter.

Official data shows a 47 per cent increase in import of ready-made garments out of manmade fibre to $78.5 million from $53.5 mn in the period between April and July, the first four months of this financial year. Import of manmade staple fibre, yarn, fabrics and made-ups rose by 26 per cent to $896 mn in this period from the previous year.

After stabilising at 63.9 against the dollar towards the end of December 2017, the rupee started sliding gradually to hit 65.2 by the end of March. It has since then slid steeply to trade currently at 71.8. 

"While increasing crude oil prices have made the input of synthetic textiles costlier, which we have been able to pass on to consumers so far, rupee depreciation will certainly hit import and make export profitable. We see the industry turning around in the December quarter, if not in the September one," says Om Prakash Lohia, chairman of Indo Rama Synthetics, the country’s largest polyester maker. 

Experts believe export orders booked after April will start getting executed now. Hence, its impact would be seen partly in the September quarter with more concrete and final results in the December quarter.

"The government should immediately double basic customs duty on manmade staple fibre and yarns such as polyester, viscose and others to 10 per cent from the existing five per cent, and on nylon fibres and yarns to 15 per cent from the existing 7.5 per cent," says Sri Narain Aggarwal, chairman, The Synthetic and Rayon Textiles Export Promotion Council. 

Aggarwal also wants the government to address issues in the goods and services tax (GST), such as refund of input tax credit and other embedded taxes.