"After having fallen by over 12 per cent this year, the Indian rupee has hit an all-time low against the US dollar. Though a weakening rupee is in favor of exporters, stalwarts of Indian apparel industry are skeptical about how it will benefit trade. Harish Ahuja, Managing Director, Shahi Exports believes the depreciating rupee benefits as the apparel industry gets more orders. The depreciation has been only against the dollar, and not against other currencies. Dollar exports from India is only around 40 per cent."
After having fallen by over 12 per cent this year, the Indian rupee has hit an all-time low against the US dollar. Though a weakening rupee is in favor of exporters, stalwarts of Indian apparel industry are skeptical about how it will benefit trade. Harish Ahuja, Managing Director, Shahi Exports believes the depreciating rupee benefits as the apparel industry gets more orders. The depreciation has been only against the dollar, and not against other currencies. Dollar exports from India is only around 40 per cent.
Opinion divided on depreciation
HKL Magu, Chairman, Apparel Export Promotion Council (AEPC), feels the rupee depreciation will help the industry to get more orders. Although big buyers or top stores ask for this adjustment, they understand currency fluctuation is in nobody’s control and this trend will continue in future.
PMS Uppal, MD, Pee Empro Exports, Faridabad and President, Okhla Garment and Textile Cluster (OGTC),
Delhi, believes the situation will benefit small and medium exporters. The company plans to grow at 20 per cent and a weak rupee helps to consistently achieve this target. However, Raja Shanmugham, President, Tirupur Exporters’ Association (TEA), and MD of Warsaw International, disagrees with this. He says Indian exporters can’t get too much benefit as buyers ask for bonus money in such a case; especially in repeat orders. Lalit Thukral, President, Noida Apparel Export Cluster and MD of Maharana of India, Noida also seconds the opinion that plummeting rupee benefits exporters.
Other countries too sees currency depreciation
Anil Peshawari, MD, Meenu Creations, Noida points out Chinese Yuan depreciated nearly 10 per cent while Turkey’s Lira depreciated more than 50 per cent. Turkey, which earlier was doing mainly knitted garment, is now focusing on woven garments also. Moreover its proximity to Europe is also boosting imports. Bangladeshi Taka depreciated just 2 per cent, in recent months. But Dhaka already has a lot of advantage over India. India’s exporters were already working on nominal margins. Now, to get orders, they are passing or have to pass the minor benefit of rupee depreciation to buyers. If the US imposes tariffs on Chinese apparel, China will move more aggressively to EU, and can also supply apparel at extremely low cost as they have to keep their capacities occupied.
Long-term benefits of hedging
A strong dollar leads to exporters being involved in hedging. HKL Magu believes most big exporters have hedged their currency and got Rs 67 or Rs 68 against the dollar. This will benefit in the long run when exporters will hedge the dollar for Rs 75 after one year. Medium level exporters who normally don’t hedge also have an eye on the situation. Most will hedge only if the rupee goes above Rs 75.
