The Hindu Business Line : Synthetic fibre makers banking on weak rupee for growth

Mumbai, Sept 26 With little help forthcoming from the Government policies and softening global economy, the synthetic and rayon textile exporters are banking on depreciating rupee against dollar to retain the growth tempo in the financial year 2008-09.

Speaking at the 54th annual general meeting of the Synthetic and Rayon Textiles Export Promotion Council, Mr Ambuj Kasliwal, Vice-Chairman, said India’s exports rose 35 per cent to Rs 4,612 crore in rupee terms between April and July.

“However, we have to temper the optimism as the recent reduction of duty drawback rates across the board for all synthetic textiles products will jeopardise the sector,” he added. A more realistic trend of exports for rest of the year will emerge in the coming months.

The duty drawback rate cut on yarns spun out of manmade staple fibre was steep and disproportionate to the duty incidence and for polyester filament, texturised and twisted yarn only customs portion of the drawback rates has been announced which is a deviation from the past practice of announcing two separate rates for all the export product that is one with Cenvat credits and the other without cenvat facility, he said.

The situation is further aggravated as the reduction in the rates have been effected at a time when China, the main competitor, has increased export subsidies on manmade fibre textiles from August 1 from 11 per cent to 13 per cent, SRTEPC said.

Exports up

Manmade fibre textiles (MMF) exports have touched an all-time high of Rs 12,624 crore in the fiscal 2007-08, a growth of 16 per cent. However, the third largest textile market, United States, which accounts for over six per cent of India’s total MMF textile, declined about nine per cent compared to last fiscal due to a recession in the US economy. Other main markets for MMF are Brazil, Germany, UK, Saudi Arabia and Italy.

“What is more remarkable about the export growth is that it has been achieved in the face of sharp appreciation of rupee, spiralling oil prices and raw material costs, high interest rates and general economic slowdown in some major markets,” said Mr Kasliwal. The Government has fixed an export target of $3,600 million for the current fiscal.

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