Knitwear exporters sore over high cost of import materials

Many knitwear exporters in Tirupur cluster have started feeling the pinch of the constantly falling rupee as they are recording financial losses on specific orders because of the higher cost being paid to import apparel accessories and due to increase in transportation charges.

On Wednesday, the rupee plunged against dollar and stood at 64.11 at the market close.

With major cost cutting at the production stage not been possible in the case of apparel export business, the exporters here are in a dilemma of how viability could be sustained in the coming months.

“Unlike in some other businesses, the foreign buyers in the apparel trade are insisting on using accessories like tags, buttons, zips and laces of only ‘nominated manufacturers’ who are basically situated abroad. In this scenario, we are forced to import the accessories at high rates because of the heavy rupee depreciation,” G.R. Senthilvel, exporter and secretary of Tirupur Exporters’ and Manufacturers’ Association, pointed out to The Hindu .

With the processing of apparel orders mostly take 45 to 120 days before delivery, the wide fluctuations in the rupee value are upsetting the cost fixation.

Adding to woes, fuel prices are getting hiked frequently increasing the transportation costs.

Cross-currency movement

Another big setback for the knitwear exporters is that buyers from certain developing countries who were procuring the garments through agents situated in a third country, are asking the apparel manufacturers here to hold delivery for some time to avoid losses through cross-currency movements.

Mr. Senthilvel cited the example of a Bolivian buyer who was purchasing the garments made from Tirupur through a buying agent based in Hong Kong.

“This buyer has asked for some more time to take the delivery, though the order was confirmed sometime back, because the currency in that country also depreciated against dollar like ours,” he said.

With the Latin American nations and third world countries being huge importers of apparels from India ‘in terms of quantity’, the orders getting stuck in the midway would prove to be costly for apparel makers here, he added. S. Dhananjayan, industry consultant and chartered accountant, pointed out that unless steps were taken to improve the rupee against dollar through long-term capital inflows and encourage more exports from the country, the situation could get worse.