Rupee supports exporters to benefit cotton industry

Work came to a standstill in the wake of the spiralling cotton prices and accumulation of yarn stock.– PHOTO S. SIVA SARAVANAN  

Depreciation of rupee against the dollar is expected to benefit several industries in this region though it will have an impact on investments in imported machinery for capacity addition or expansion.

Coimbatore region has several industries that are into exports – textile mills, garment units, foundries, coir and tea sectors. These exporters are able to quote competitive prices to the international buyers because of the rupee depreciation.

The situation is likely to lead to higher cotton and yarn exports. The total yarn exports from the country in July were nearly 140 million kg. Mills that have cotton stocks and are exporting yarn will benefit from the current situation. The international demand is good for home textiles. Export of fabric also has huge potential. However, factors such as high interest rate and tax on fabric procured by exporters from the manufacturers add to the cost, says M. Senthil Kumar, former chairman of the Powerloom Development and Export Promotion Council. The garment exporters usually have forward contract and hence, they may not get the real benefit. However, it is expected to benefit the exporters in their future orders, says an exporter in Tirupur.

The weaving industry imports looms, especially second hand ones to add production capacities. The high duty on imports and rupee depreciation has made it difficult for the weaving sector to invest in machinery, Mr. Senthil Kumar added.

According to Jayakumar Ramdass, president of Institute of Indian Foundrymen, Coimbatore, several foundries here export grey iron, steel and aluminium castings to the tune of Rs. 750 crore to Rs. 1,000 crore annually. The export orders are low now. Customers also know that the rupee is depreciating against the dollar and hence, ask for lower prices.

Those who have long-term contracts are doing well. Orders are expected to pick-up in a couple of months and the exporters will benefit then. However, many units import scrap and they will not do so now because it will be expensive.

S. Mahesh Kumar, president of Coir Pith and Allied Products Manufacturers’ and Exporters’ Association, said that export of coir fibre and coir pith has started picking up. The export orders were low for nearly eight months and during the last one month, it was reviving. Annual export of coir products from Pollachi is more than Rs. 500 crore. The contracts were usually signed three months before shipment. While those exporting to the U.S. will benefit from the rupee depreciation, those exporting to neighbouring countries may see the buyers negotiating the prices.

The main competition comes from Sri Lanka and the exporters here will be able to quote competitive prices. “We will be able to match Sri Lanka’s prices,” he said.

Tea exporter N. Anand said that the tea exporters stand to benefit in a significant way from the current trend. “We are able to quote lesser prices and the buyers are also motivated to purchase from us,” he said. The internal demand for tea is also good.