The textile industry, which earns about 50 per cent of its revenues from exports, was badly hit by the rupee appreciation. According to commerce ministry data, while the exports grew 8.60 per cent to $13 billion during April-December 2007-08, they declined by 3.54 per cent to Rs 52,559 crore in rupee terms.
The rupee appreciated by 12 per cent during 2007-08, badly affecting the earnings of textile companies and forcing many of them to shift their production bases from India to neighbouring countries such as China and Bangladesh. This is understood to have caused a job loss for thousands of people employed in the sector.
"The domestic textile industry has been losing out to competition from Chinese manufacturers. Its earnings have been affected by the sharp rupee appreciation. By contrast, the Chinese companies remain unaffected since the Chinese government has pegged the yuan against the dollar", said a textile analyst.
Leading companies saw a depressing performance in the latest quarter. Arvind Mills, for instance, saw a 36.27 per cent increase in its net sales for the quarter ended March 2008.
However, the net profit declined marginally. Alok Industries registered a 26.27 per cent jump in its net sales for the quarter ended March 2008, while its net profit slumped by 31 per cent.
The industry also failed to achieve an export target of $25 billion set by the union textile ministry for 2007-08 and ended the year with an export of $20.5 billion.