Fall in the value of the rupee against the dollar has again brought the Indian textile sector back on the global map. Going by initial inquiries and orders, the industry hopes exports will be higher by 15-20 per cent in 2013-14. Textile export orders in the last few months have started to pick up due to the overall better sentiment in the US and the Euro zone, as well as the depreciation in the rupee.
India's textile exports were $32 billion in 2012-13 out of which apparel exports were $15 billion. This year, apparel exports are expected to be around $17 billion, while total textile exports are estimated to be $37-$40 billion.
"The rupee has been one of the worst performing currencies, while the Chinese yuan has appreciated against the dollar, which has made Indian textiles more competitive, causing more inquiries to flow in," said Sunil Khandelwal, chief financial officer, Alok Industries.
Arvind, which is a major textile player, as well as exporter, depends mainly on the customer relation they have built over a period of time and have their order books full for the next one year.
"We will receive an advantage due to the falling rupee, but we are running to our full capacity as our customers give a guidance at the beginning of the year. On the other hand, labour cost, gas, etc.. have gone up, which, to an extent, nullify the rupee depreciation to a certain extent," said Sanjay Lalbhai, managing director of Arvind.
Importers are now looking at India for exports, especially after the rupee fall. The rupee has witnessed a six per cent fall against the dollar in the last one month, while the Chinese currency, yuan has remained stable.
"Last year, exports fell due to the poor global economic sentiment. This year, however, textile exports have started picking up. After witnessing a lull last financial year, apparel exports have also improved," K S Rao, Union textile minister, said. Rao has targeted $50 billion textile exports till FY15.
He was banking upon the steps taken by the government to boost textile exports, include extending a two percent interest subsidy scheme on handicrafts, handlooms, carpets and garments up to March 2014, additional duty credit of two percent of freight on board value on export of certain knitwear apparel for 2013-14.
Textile exporters will be able to take advantage of the current fall in the rupee for the orders which were placed earlier, but the advantage as exporters usually hedge around 50 to 60 per cent of their foreign exchange.
Orders from the US and the Euro zone have also improved in the last few months due to which orders have increased to India, which is also beneficial for the sector.
Last financial year, textile exports were lower by 4.8 per cent to $32 billion due to weak demand coming in from major countries. Many textile players are now also changing their focus to other non-traditional countries like Japan, Latin America and Australia to increase exports.