Re rise hurts textile exports to US in Jan-March
Even as textile and apparel exports to the US increased 7.49% in volume during January-March 2007 against the year-ago period, it declined 0.43% in value terms, pointing to the declining unit value realisation.
By Sanjeev Choudhary, TNN |
NEW DELHI: Even as textile and apparel exports to the US increased 7.49% in volume during January-March 2007 against the year-ago period, it declined 0.43% in value terms, pointing to the declining unit value realisation.
It is for the first time in several decades that textile export to the US has shown negative growth in value terms, caused mainly by the hardening rupee. China, however, has shown impressive growth in both volume (24.86%) and value (46.47%) in the same period.
The disparity between value and volume growth in exports from India is also substantial on an annual basis. In the year ended March, India witnessed a growth of over 12% in volume but less than 4% in value terms. The apparel segment registered a decline of 2.1%, while non-apparel textile grew by 3%.
China, the largest textile exporter to the US with a market share of 31% in value terms, however, saw a reverse trend. It grew 31% in value and 15.5% in volume in the year ended March 2007. India has had an impressive growth of 27% during 2005 and 8.98% in 2006 in value terms.
Much of the blame for the slowdown rests on the hardening rupee, which has appreciated 4.45% against the dollar during April 2006-April 2007. The Chinese yuan also appreciated 3.5% during the period. The currencies of other major exporters — Pakistan (1.3%), Sri Lanka (5.5%) and Indonesia (2.3%) — depreciated during this period.
ADVERTISEMENT
All three countries witnessed better growth in value terms compared to their volume growth. Pakistan grew 6.54% in value terms, whereas its volume growth was only 0.57%. Sri Lanka, which witnessed a negative growth of 3.1% in volume terms, grew 1.68% in value terms. Indonesia’s export volume grew 13.9% compared to 25.77% in value terms. In order to mitigate the impact of currency appreciation on exporters, industry body Confederation of Indian Textile Industry has sought government intervention. Its secretary general DK Nair said exporters are forced to underprice a product to compete with those whose currencies have depreciated.
Moreover, exporters are facing a rise in the cost of production due to continuing high level of inflation, says Mr Nair. The National Manufacturing Competitiveness Council has also taken up this issue with the government.
Start a SIP with as low as ₹500 with ET Money App!
Download
The Economic Times News App for Quarterly Results, Latest News in ITR, Business, Share Market, Live Sensex News & More.
The Economic Times News App for Quarterly Results, Latest News in ITR, Business, Share Market, Live Sensex News & More.
ADVERTISEMENT
