Indian textile industry believes that 2007 is turbulent and 2008 is safe
The appreciation of the rupee in 2007, in a broader sense, means that the Indian economy is stronger, but on the other hand, it also caused some negative effects. 2007 is a ruthless year for the textile industry, and the textile industry is one of the largest foreign exchange earners in India. In order not to be burned by the appreciation of the rupee, exporters have to do everything possible. Even apparel and home textile companies may be implicated by the 9% appreciation of the rupee against the U.S. dollar. The Indian media Fibre2fashion collected some companies’ opinions on the export situation last year. Tirupur Exporters Association President MrASakthivel said: In 2007, the appreciation of the rupee against the U.S. dollar exceeded expectations, shaking the confidence of exporters in Tirupur, and knitwear exports fell by 10%. In the history of Tirupur garment exports, many companies reduced their production capacity for the first time, and the number of unemployed reached 10,000. We feel that the real difficulties have continued into 2008, because most of the orders executed in 2007 were signed in 2006. The increase in interest rates also has a negative impact on export growth. The decline in exports has forced apparel exporters to reposition their expansion strategies, including corporate production capacity and machine upgrades. In addition, the technology update fund arrangement has not improved. It is worth noting that SME exporters are not fully aware of using financial tools to help them avoid exchange rate risks. Therefore, basically, for the apparel industry, 2007 was a turbulent year. TEA president talked about the economic recession that is forming in the US market. He said: If we analyze the export situation of Tirupur clothing, our market share in the US is close to 30-35%, which is a large proportion for a country. The US consumption pattern is also higher than the EU market. From this point of view, the ongoing economic recession in the US market has greatly affected our exports. In order to overcome the difficult situation in 2008, we are working hard to develop new markets. At the same time, we are taking correct measures to reduce costs by improving productivity, implementing the correct system, and producing high value-added clothing. Our midpoint produces organic cotton clothing and other special products. These products have good potential in the global market and are more expensive than conventional clothing. The rupee has depreciated recently. According to expert analysis, the rebound of the US dollar and higher crude oil prices are the main reasons for the depreciation of the rupee. The TEA president said that since the Reserve Bank of India (Reserve Bank of India, RBI) has sold US dollars in the market and hopes to curb the continued depreciation of the rupee, I do not expect the rupee to continue to depreciate. In addition, when oil prices get higher and higher, the government will naturally control the devaluation of the rupee. In the longer term, the depreciation trend will not last. Finally, MrSakthivel said expectantly: The outlook for the apparel export industry in 2008 is relatively good, and we expect it to grow by 20% in 2008-09. The main reason for the growth of apparel exports is that the competitiveness of our competitor, China, is weakening. The Chinese yuan has appreciated against the U.S. dollar and production costs have increased, including electricity costs, reduced value-added tax refunds to exporters, and rising labor costs. From this point of view, the level playing field in the global market will be reorganized. Exporters taking the right measures to improve their competitiveness will certainly help them make a comeback in the global market and maintain their market share. Visma International has created its own world in the field of household equipment. Company president Prashant Sankaran said that for the apparel industry, 2007 is definitely a turbulent year. The fluctuation between the US dollar and the rupee is one of the main reasons. The integration and expansion of large enterprises have affected the development of small and medium-sized enterprises in terms of labor and equipment. He said: At present, we believe that the reason for the appreciation of the U.S. dollar is the abnormal increase in crude oil prices and the expansion of Indian imports. This may not be a long-term phenomenon. The reason for the appreciation of the rupee can be attributed to the large amount of investment flowing into the country, which stimulates the rapid development of the domestic economy. However, investor confidence has temporarily declined because the economy has become inflationary, which has reduced the flow of funds, and the rupee has depreciated due to the expansion of the country’s imports. However, this phenomenon is generally considered to be a temporary phenomenon, and the rupee will appreciate soon and return to recent levels. The ongoing economic recession in the U.S. market has not directly affected us on a large scale. Our market is mainly in the European Union. After the US economic recession gradually affects the European Union, our business will also be affected to a certain extent. In 2008, our position is strengthening, and we must stick to our strengths. Outsourcing procurement, commercial sales, and providing new concepts to our customers. We feel that now is the time for us to integrate and show our strengths to customers. When the economic situation is good, customers will take the initiative to establish business relationships with us. In general, although last year was a turbulent year for exporters, they expect that this year’s situation will be much safer.