Yarn exporters to make most of rupee depreciation

Industry players push for export orders as fall in rupee will help increase margins

While the recent rupee depreciation against dollar may have brought some cheer for yarn exporters, the industry players are pushing for export orders to make the most of the situation.

According to yarn exporters - both cotton and synthetic, the rupee depreciation till Rs 58 against US dollar has helped increased their margins but the exports have not been sufficient.

"Export orders have not been sufficient to make the most of the weakening rupee. The orders have been below average. Hence, we will be pushing and exploring opportunities to increase our exports by at least 30 per cent in the next few weeks to avail maximum benefit out of the rupee depreciation," says Makrand Appalwar, chief executive officer of Emmbi Polyarns Ltd which currently exports yarn worth Rs 75 crore to various countries annually.

Industry experts blame it on China which was one of the largest buyers of Indian yarn, especially cotton.

"China has been cutting down its textile capacities. Resultantly, it has cut down on buying yarn and this has impacted some of the Indian export orders since China was one of the major buyers. Whatever margins were rising due to rupee depreciation is being set off by below average export orders and this needs to be changed," says DK Nair, secretary general of Confederation of Indian Textile Industry (CITI).

Seconding Nair is Jayesh Pathak, president of Bombay Yarn Traders Association.  According to Pathak, Indian yarn exporters are now looking at other markets to offset the demand decline from China.

"Our main cotton yarn buyers are China, followed by Pakistan and other countries. But China has in recent times reduced demand since it is cutting down overall textile capacity in the country. This has impacted our export orders. However, the industry is pushing and aiming to attract as much export orders as possible in near future from other markets," says Pathak, president of Bombay Yarn Traders Association.

What's more, Indian yarn exporters are also not getting desired prices in yarn exports.

"Yarn prices are lesser in overseas markets than domestic. Moreover, overheads of Indian yarn exporters are also higher than other countries. This has hindered Indian yarn exporters from enjoying the right prices for their products internationally," adds Pathak.

While China and Pakistan happen to be one of the main cotton yarn buyers, regions like North America, Europe, Turkey are the top synthetic yarn buyers. The international prices for cotton yarn is only around Rs 100-400 per kg, state industry players. 

Meanwhile, Nair cautions that the Indian yarn exporters have a limited scope of enhancing exports. "Unlike garments which are ready-made goods and can be sold anywhere, yarn can be sold only in those countries where fabrics are made. This puts a limit on the scope of enhancement of yarn exports by Indian exporters," adds Nair.