Rupee rise hits growth in textile exports to US

The exports grew 1.45% in 2007 as against 9% a year ago.

The strengthening of the rupee against the US dollar by over 12 per cent has resulted in lower textile and apparel exports to the US in 2007.

Exports to the US, the largest market for Indian textiles and apparel, grew marginally to $5.10 billion for the year ended December 2007, compared with $5.03 billion in 2006.

According to the US Office of Textiles and Apparel, India's textile and apparel exports grew a meagre 1.45 per cent in 2007, as against 9 per cent a year ago.

Non-apparel exports saw a downward trend and grew 4.88 per cent in the 12 months ended December 2007, compared with 12.42 per cent in 2006.

Meanwhile, China's textile and apparel exports to the US (in dollar terms), grew 19.40 per cent in 2007 ($32.32 billion), as against 20 per cent in 2006 ($27.06 billion). Its non-apparel exports grew 11.98 per cent to $9.57 billion in 2007.

Experts say Indian producers will be under severe pricing pressure since the safeguards imposed by the US on imports of specific textile and apparel products from China are set to expire this year.

Indian producers will also see increased competition from low-cost countries like Vietnam, Bangladesh and Cambodia in the US. Industry sources said profit margins could decline in 2008.

Sunil Jain, president, Northern India Textile Mills' Assocation, said: "I do not think Indian textile exports will recover. The cost of production here is increasing by 5 per cent every year compared with other low-cost countries."

"Our competitors are growing much faster, and I fear that by this year-end, our textile and apparel exports will go into the negative territory", Jain said.