The Hindu Business Line : ‘Textile, leather exporters hit by rising rupee’

New Delhi, July 5 Due to appreciating value of the rupee against the US dollar, the textile and apparel manufacturers engaged in exports have suffered decline in total revenue, operating income and net profit margin to the tune of 7.9 per cent, 8.9 per cent and 7.9 per cent, respectively.

There could be an erosion of net profit margins to the extent of 10.4 per cent during the next six months on account of rupee appreciation, according to a survey conducted by the Confederation of Indian Industry.

The impact of the appreciation is worse in the leather and leather products sector. The erosion of net profits expected in the next six months is 13.7 per cent and the industry is already facing an erosion of 8.8 per cent on its net profits margin.

The exporters remain in a disadvantageous position in price sensitive international markets. Competing Asian countries have experienced either significantly lower rates of appreciation of their respective currencies or their currencies have depreciated during the same period.

Chinese Yuan has appreciated by 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, making their products more competitive in the international markets against Indian exports, according to the chamber.

The chamber has suggested a number of initiatives to counter the impact of the appreciating rupee. Firstly, Duty Entitlement Pass Book and Duty Drawback rates may be enhanced by five per cent. Secondly, rate of interest on pre-shipment and post-shipment credit be reduced for exporters to six per cent. Thirdly, Exchange Earners’ Foreign Currency Accounts may be made interest bearing. Fourthly, commercial banks may be mandated to meet 15 per cent export credit disbursement target.

More Stories on : Exports & Imports | Forex | Textiles | Leather

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‘Textile, leather exporters hit by rising rupee’