Today after 9 month of duration, rupee is appreciating day by day and our exports is badly affected by it. The growth of manufacturing industry is dipped to nearly 7% from 11%, IT industry is also badly affected by this event but textile industry of India is worstly affected by it.
According to Federation of Indian Export Organisations (FIEO), the profitability of the exporters have been wiped out and constant appreciation of the rupee is threatening the competitiveness of the Indian products. It also added that the competitors are just sitting on the fence to occupy the market.
Mr. G K Gupta president of FIEO stated that the downfall in exports is also affecting the industrial production, which has slipped from 13.2 per cent in July 2006 to 7.1 per cent in July this year.
In export sector maximum number of people are working and if same situation will continue these employed professionals will be badly hit and will be retrenched by the companies.
During festive season like diwali, garments,hosiery etc are always in huge demand but this year condition of this industry is worst than ever because of Rs appreciation. Companies based at Gurgaon are sending workers on 45 days’ leave without pay before the festival.
To protect their companies, Several producers are shifting their production base overseas. House of Pearls Chairman Deepak Seth said the company, which laid off 1,000 employees recently, was finding it better to manufacture in China, Indonesia, Vietnam and Bangladesh because of following reasons i.e shorter lead time, cheaper raw material and depreciated currency.
Nahar Industrial Enterprises Ltd. statement : There is a 10 to 12 per cent decline in the export realisation of fabric due to the rupee impact. Domestic prices are also depressed. We are, therefore, using it for in-house production,” .
According to (CITI) confederation of textile industry general secretory D.K.Nair : Our textile exporters are finding it difficult to compete in the price-sensitive international market as Asian competitors have experienced much lower rates of appreciation in their currencies.
Chinese Yuan has appreciated 4.6 per cent and on the other hand Pakistani Rupee and Bangladeshi Taka have depreciated by 1.4 and 0.43 per cent respectively. So Producers in countries like Vietnam, Bangladesh, China and Pakistan are able to sell at much lower prices than Indian companies .
Indian textile exports may fail to reach the set target of $25 billion as rupee appreciation and lower investments are taking its toll. It is expected to face a shortage of 16 percent in the current financial year.
Layoffs in Textile Industry: According to the CITI report on 'Impact of Textile Export Deceleration on Employment' around 2.72 direct jobs and nearly 3.2 lakh indirect jobs lost in fiscal year 2007-08.
Around 5.79 lakh new jobs in textile sector in 2007-08 are lost due to Rs appreciation.
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