)
The Rs 17,800 crore knitwear industry in Tirupur today urged RBI Governor to intervene in the currency market and arrest the Rupee gains for the interest of country's exports.
In a letter to the RBI Governor Raguram Rajan, Tirupur Exporters Association (TEA's) President A Sakthivel said that after the Lok Sabha results, the Rupee has been gaining against Dollar on a daily basis and on Monday morning it touched Rs 58.57 per dollar and is widely expected that the Rupee gain will continue in the coming days also, which may not overall augur well for the knitwear exporters of Tirupur.
"We must note at this juncture that Tirupur knitwear exports have regained the export growth only in last year after facing a flat or downside growth in the previous four years and now only the exporting units, mostly in SMEs, have regained the business confidence and has been putting maximum efforts to sustain and increase exports in the global market," said Sakthivel.
He noted that, India's main competing country China is maintaining its competitive advantage by calibrating their currency and other country Bangladesh, being a least developed country, has an advantage as zero customs tariff in the European market.
"We need a level playing field to sustain in the global market," said Sakthivel, who noted a stable government, would lead for continuance of more Foreign inflows and moreover, high interest rate differential between US treasuries and Indian bonds will also help attract flows into India.
More importantly, the appreciation of rupee against Dollar would upset the applecart of Tirupur knitwear exporting units and loose its competitiveness in the tough global market and our most apprehension is that this new situation may also trigger to derail the last year rebound growth trajectory and continuous sustenance of exports in global market.
After witnessing a drop of around seven% in 2012-13, export from the knitwear hub of Tirupur reported a 15% growth and 30% in Rupee terms, in 2013-14. Export in Dollar terms was at $2.95 billion in 2013-14 and the industry says if Government gives support it can double the export, and without government support, it will grow at around 15%.
According to Sakthivel, in 2013-14, the industry exported $2.95 billion worth of goods, as compared to $2.52 billion in 2012-13. In 2011-12, export was at 2.73 billion. In rupee terms in 2013-14, exports stood at Rs 17,817.08 crore as compared to RS 13,709.83 crore in 2012-13 and Rs 13,065.30 crore in 2011.12.
Sakthivel said that the reasons for growth include, increased manufacturing cost in China, which went up around 15-18%, non compliances factories in Bangladesh as compared to more than 95% compliances factories in Tirupur, fall in Rupee value, increased purchasing power in EU market, revival of US market and penetration into new markets.
He noted that in the last fiscal new markets in rupee terms contributed around Rs 600 crore to the overall revenue.
"If government signs Free Trade Agreement with Europe, Canada, Israel and other countries and change the policies the industry got potential to double the exports in the next 3-4 years or we will grow by around 15%," said Sakthivel.
Knitwear industry is one of the major sources for employment in Tirupur. Around four lakh people are dependent on this industry. But in the recent years besides the external factor, like economic slowdown, the industry is also facing other issues like pollution related issues, not much policy supports and incentives to promote the industry and connectivity infrastructure, which is hitting the exports, said Sakthivel.
