Textile industry reels under Re rise

The $45 billion textile industry is still caught in the grips of a strong rupee and exporters are hoping that the government would intervene immediately to save the sector. The situation is a bit dicey as the industry, one of the top three foreign exchange earners in the country, will lose 2 lakh jobs in the apparel segment within 2-3 months.

Confederation of Indian Textile Industry Chairman Shekhar Agarwal said, "The government should pay back the players the state and local duties, which make up almost 5 per cent of the export value.

The transaction and infrastructure deficiency costs, which the exporters have to bear, should also be returned. Unless the government plans to compensate 7-10 per cent of the costs to the industry, it will be difficult to sustain in the global market."

The industry has targeted a turnover of $85 billion by 2010. However, the textile sector has been reeling under immense pressure since the beginning of this year.

The growth of apparel exports, which stood at $8.2 billion in 2006-07, has dipped. Industry experts said the turnover will not even reach $8 billion, if the current situation does not improve.

Apparel Export Promotion Council Chairman Vijay Agarwal said, "Within 2-3 months, we are set to lose 2 lakh jobs in the apparel industry. They account for 4-5 per cent of the total workforce in apparels, which stands at 3 million presently. Workers in Bangalore, Tirupur and Delhi will be the most affected."

According to him, the apparel sector's growth had already dipped by 3-4 per cent and is likely to worsen in the current month to 6-7 per cent. "The government must refund the state levies immediately," he said.

Gokaldas Exports Managing Director Rajan Hinduja said, "Incessant rupee appreciation will eventually hit the entire industry. It is a serious matter of concern. How the government is going to address it is yet to be seen." He said that the earlier relief announced by the government has not reached the players.

Agreeing with Hinduja, Agarwal said the procedure to apply for a refund was very complicated.

Cotton textile exports is also not insulated.

"Earlier, we estimated that cotton textile exports would reach around $6.25 billion in 2007-08. But now it seems difficult," said Prem Malik, chairman, Cotton Textiles Export Promotion Council. In 2006-07, the export figure stood at $5.25 billion.

Hinduja said the industry would now have to gear up to the present situation.

Alok Industries Managing Director Dilip Jiwrajka reiterated that the industry should now concentrate on value added products in order to combat such hard phases.

Market sources said that smaller exporting firms with an annual turnover of Rs 10-40 crore are trying to diversify into the domestic market.

Jayant Shah, managing director, Leena Denim, a textile exporter firm with a turnover of Rs 16 crore, said, "We are expecting a decline of 10 per cent in our turnover for the current financial year. We have started diversifying into the domestic market as it has greater potential." The company mainly exports to the US.