Eerie calm

The rupee’s 6% rise against the US dollar in 2017 has sent textile and apparel exporters into a tizzy. It is currently trading at Rs.64.04 as compared to Rs.66.80 last August and has led to a dwindling of orders for textile and apparel exporters. The textile and clothing industry which employs about 51 million people exports goods worth about $50 billion and contributes about 15% to the country’s total export earnings.

India is the world’s second-largest manufacturer and exporter of textiles and within the industry, the ready-made garment segment which contributes 42% seems to be the most affected. While the ready-made garments export figures for the first two months of FY18 are $3.35 billion compared to $2.81 billion for the same period in FY17, the impact of the rise will be reflected in the data for the months of July and August. That is because through January-May 2017, the rupee has appreciated 5% (from Rs.67.95 to Rs.64.50)

What has compounded the misery of the industry is that the Bangladesh Taka and Vietnamese Dong have been stable since January 2017, and the Sri Lankan Rupee has depreciated from Rs.150.23 to Rs.153.38 against the dollar. This makes their exports a lot more attractive. The only saving grace is that the Chinese Renminbi has also appreciated by about 4% this year. Indian apparel exporters like the software sector must surely be hoping that the rupee will drift down later this year, so that they can regain their competitiveness.