'Textile, apparel exporters benefit from Rupee's fall'

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Namrata Kath Hazarika | 12 May, 2012
The continuous rupee depreciation has been profitable for many textile and apparel exporters in the country, according to the Confederation of Indian Textile Industry (CITI).

"Rupee depreciation is helping textile and clothing as of now. The currency fluctuation that they are talking about is only depreciating. Normally, people does not take forward cover for 100 percent of their receipts, they take it for only for three or four months. Exporters will get benefit on what they have not covered i.e. the portion which they have not taken cover," CITI Secretary General, D.K. Nair told SME Times.

If exporters have not made any hedging they will be benefited under the present circumstances, Nair added.

Hedging is a method used by exporters to eliminate or hedge foreign exchange risk resulting from the currency fluctuations.

Nair added that most of the exporters have not hedged as they felt that the rupee will continue to depreciate further. This is also a reason why the sector is witnessing growth at the moment in the export front.

Chairman, Apparel Export Promotion Council (AEPC) Chairman A. Sakthivel mentioned that there are potential orders flowing from the overseas markets currently. But to some extent it is not helping the exporters much and to some extent it is being profitable. It is a mixed scenario.

In this context, Nair also added that the overseas demand is improving on the account of rupee depreciating. Although there is an uncertainty in the overseas market, there is a hope that the US and European markets will improve.

"And, if there is a serious problem in the European markets in the future, I expect problems to again shape up," he added.

India's textile and clothing exports touched about $34 billion in 2011-12, as against $26.8 billion in 2010-11.