'We will miss target if rupee rises further'

A rising rupee had drastically impacted cotton textile exports. The government should intervene and enable the domestic exports to be globally competitive, said Prem Malik, chairman of the Cotton Textiles Export Promotion Council (Texprocil) in an interview with Chandan Kishor Kant. Excerpts:

How has an appreciating rupee impacted exports of cotton textiles?

Exports are severely hit. As cotton textiles are manufactured from raw materials available indigenously, we cannot avail of any import benefits. The rupee steeply appreciated against the dollar by 8 per cent in the recent past and if it continues to strengthen, our cotton exports will be drastically impacted. We could not meet the target of $5 billion exports in FY07. We have set an export target of $6.3 billion for FY08 and will not achieve it, if the rupee continues to rise. Do you anticipate any threat from imports?

Imports will certainly go up. If our competitors' products become cheaper, there will be a tendency to import in a major way. You cannot kill your own industry and help competitors come and sell their products in the country. As the rupee keeps strengthening, our export cost will rise and business will gradually shrink. There is no growth when business is not profitable. Won't the decline in growth impact cotton production in the forthcoming season?

The crop for FY09 is yet to be sown. If imports continue to be cheaper, it will prompt the industry to import cotton. Hence, the remuneration to farmers will go down, severely affecting them. Moreover, the growth in our cotton production, which has recently picked up, will also feel the pinch. What do you expect the government to do?

The government must intervene. There should be stability in the dollar-rupee parity so that we can also compete with Pakistan, Bangladesh, Vietnam, Cambodia and Indonesia. All of them are doing better than us as their currencies have depreciated. The government must ensure swift reimbursement of taxes and duties collected from exporters. The Central government cites the lack of its control over states and municipal bodies as the reason for the delay in reimbursement. Instead, the government should create a mechanism to ensure speedy reimbursement of taxes and duties that states collect from exporters. Where do you the see Indian textile industry in a rapidly changing world?

The Indian textiles and clothing industry has tremendous potential to grow.

Though we are next only to China in the global order, the gap between the two countries' textile industry is so wide that it offers immense scope to grow. That is why, in our eleventh five-year Plan, the target for the overall industry has been set at $110 billion from the present $54 billion. The targeted turnover from the global market alone is fixed at over $50 billion.