Textile industry seeks new markets

Away from the national mourning over the erosion of software companies' income due to the rupee's rise against the dollar, the country's textile industry, among the top three foreign exchange earners, has already begun to find solutions.

Since the problem is specific to the US Greenback, the solution the industry has hit upon is to get into markets where trade is not denominated in dollars.

That is easier said than done. The Indian textile and clothing industry earned $17 billion from exports in 2005-06 and is estimated to have earned $20 billion last financial year. It has set itself $27 billion as the target for this year.

The US has been the traditional favourite as an export destination and singlehandedly gives the Indian textile industry more than a third of its export income, more than the countries in Western Europe, which constitute another big block.

Given the strategy the industry has now adopted, the figures may go topsy-turvy as Eastern Europe, Africa and Asia come in focus, reducing dependence on the US market, and, thereby, on the depreciating dollar.

At the same time, the industry is putting value-added products in sharper focus, to stand head and shoulders above the cheap stuff coming out of China.

Thus, Alok Industries, an integrated textile company, has ventured into Poland, Slovakia and countries in Africa this year. It entered the Czech Republic last year; the East European country is expected to contribute Rs 120 crore to its turnover this financial year.

Morarjee Textiles, apart from increasing its focus on Europe, is venturing into Japan this year with garments. "Garments for Japan will be sourced from Italy under the brand Men's Club," said Harsh A Piramal, the company's executive chairman. Last year, the company acquired Men's Club, an Italian brand.

The thrust on the existing markets will increase. "Apart from new destinations, there is tremendous potential to be tapped in the existing markets," said Dilip Jiwrajka, Managing Director, Alok Industries.

Alok company is eyeing exports worth Rs 1,000 crore in 2007-08, which will mark a 56 per cent rise over last year. The depreciating dollar, the company says, is "well factored-in".

The small and medium companies, which normally bear the brunt of adverse currency fluctuations, too have shown interest in new markets.

Prime Textiles Managing Director Manoj Kumar Patodia said: "Indian textile industry will have to tap other markets such as Japan, Latin America and African nations."

Union textile commissioner J N Singh said players who make value-added products would be able to absorb the impact.

According to GHCL chairman Sanjay Dalmia, India should have 30-40 per cent of exports in the upper-end products in order to deal with dollar depreciation.

Piramal agreed, saying: "In fact, we are doing faster product-mixes in high-end products to strengthen our market in Europe."

The volume game could be one of the ways to lessen the dollar impact, said Dalmia, but added that "it cannot be done overnight".

Welspun President Akhil Jindal said, "Combating a 10 per cent appreciation of the rupee will require shaving off at least 15-20 per cent in various other costs." That is not easy.

Welspun earned Rs 850 crore through textile exports in 2006-07. Undaunted, it is eyeing Rs 1,100 crore this year.