It is a gain for exporters

NO GAIN:Though rupee depreciation has benefited several export segments, some others such as garments are facing a pressure on prices.— File Photo: K. Ananthan  

For the exporters in this region, the rupee depreciation has come as a boon.

“It is a silver lining to the exporters,” says K. Ilango, former president of the Coimbatore District Small Industries' Association. The input and manufacturing costs were going up in India for the last few years. However, the exporters were unable to increase the product price as the buyers were unwilling to pay more. “We are able to offset these increases now,” he says.

Several overseas buyers are looking at India as the prices are competitive. Further, even in the domestic market, those who were buying from countries such as China are looking at Indian substitutes as imports are expensive.

With regard to price negotiations with the buyers, Mr. Ilango says it is a windfall for those who have entered into long-term contract with their overseas buyers.

Those who are facing a pressure on prices from the buyers also can benefit from the current situation as the volumes will go up with competitive prices though it will have an impact on the margin.

According to vice-president of Southern India Engineering Manufacturers' Association T.C. Thiagarajan, the rupee depreciation compensates for the infrastructure problems faced by the Indian manufacturers. The prices are negotiated on a case-to-case basis and depend on several factors.

In Tirupur, which is a major garment manufacturing and exporting centre, several overseas buyers are asking for 10 per cent to 15 per cent reduction in prices.

Normally, buyers compare the prices in India with those offered by other countries and ask for a reduction. With the rupee depreciation, only those who are catering to niche or specialised products are not affected. Several buyers for the other products are asking for a cut in prices. The profits have come down, says an industry source in Tirupur.