Rupee's fall, improving US market bring smiles to apparel exporters

The recent fall of the rupee against the dollar has brought more smiles to the faces of India's apparel exporters who have been upbeat over rising consumer confidence in the US, one of the major export destinations.

India's apparel exports fell 5.76 percent to $12.92 billion in 2012-13 due to the slowdown in Europe and the US, which together account for more than 65 percent of India's garment exports.

"I am positive about the US. It seems that they are out of recession," Apparel Export Promotion Council (AEPC) senior vice chairman H.K.L. Magu told IANS.

"I believe this will positively impact our apparel export to this country," Magu said.

According to him, the exporters were already getting a good number of orders from the US.

What made the exporters happier is the recent fall in rupee as their goods are now cheaper in dollar terms in the international markets.

The rupee Thursday hit the one-year low of 56.85 against the dollar on persistent dollar demand from importers and banks.

Federation of Indian Export Organisations(FIEO) president Rafique Ahmed said that rupee devaluation would help garment exporters increase shipments.

"As the items would be more attractive abroad on the price front, it would lead to an increase in the quantity of export items," he explained.

Ahmed said apparel exporters also get some additional business with the US market looking up.

"Our garment exporters will get some benefit as the demand situation is improving in that country. Some business will come to India," he averred.

He, however, said the benefit to the exporters in terms of higher margins following the rupee fall would be in the 'short-term'.

"As overseas customers also know that the rupee has fallen, they demand price discounts. So exporters' gain from higher margins due to a fall in local currency would be shot-term," Ahmed pointed out.

But former FIEO chief Ramu S. Deora said the government should not intervene and should allow the market forces to determine the value of the rupee.

"Let the rupee run free. Rupee depreciation will result in more exports for our country. Cheap local currency is going to boost India's apparel exports, among other items," Deora added.

(Mithun Dasgupta can be contacted at mithun.d@ians.in)