Substantial appreciation of rupee against Euro in quick time, consequent to the falling of the Euro against the Dollar, is putting the Tirupur apparel exporters in a tight spot as almost 45 per cent of the exports were made to buyers who trade in Euro.
From Rs. 76.66 against Euro on January 1 this year, the Indian currency appreciated to stand at Rs. 66.46 on Thursday. In 2014, rupee was even close to Rs 90 against a Euro.
“Frequent appreciation in this manner is an ‘economic fiasco’ for the predominant small and medium scale exporters-based cluster like Tirupur considering that execution of orders for apparels takes almost three months.
“So, the appreciation of the rupee against the Euro threatens the economic viability of the exporters here,” pointed out S. Dhanajayan, an industry consultant and chartered accountant.
Raja M. Shanmugam, an exporter, told The Hindu that the predicament of the exporters here was that they were not in position to demand an increase in the ‘tag value’ of the garments in tandem with the appreciation of the rupee against the Euro.
“The buyers who purchase in Euro actually are not ready to increase the tag value meaning that if they quote one Euro for a piece of apparel, the rate will not be pushed higher, just because that the manufacturers in India are facing currency volatility and profit shrinkage,” he explained.
Making the matters worse, currencies of certain competitor countries like Bangladesh has not appreciated much against Euro.
Incentives
Exporters here feel that the Union Government should increase the duty draw back rates or invoke variable incentives in the Market Linked Focus Product scheme to offset the impact of the extreme currency volatilities.
