FROM THE PRESIDENT’S DESK
The hottest topic being discussed in the Industry undoubtedly is the falling Rupee. It is at a historical low of over R72.00 to a Dollar. Is this beneficial to the Indian Garment Industry?
The answer, most definitely for the Industry’s Exporters, is a resounding yes. It has given a breather to the beleaguered segment. To those who had – under duress of keeping their factories going – booked orders at low or no margins, it has given some relief. To a few others, a windfall profit. Of course, this situation will not last too long. The Buyers, well aware of the changing Exchange Rates, will surely demand reductions and revisions of prices. But yet, it will definitely help in making our goods more competitive, as long as the Rupee depreciates more than the Currencies of our competing Countries. Added to this is the fact that a weakening Rupee will invariably increase the costs of raw materials, especially those with higher import content. My experience has been that over time, the situation will balance itself out – though remaining slightly in favour of the Exporters. So let us not start partying yet. This may prove at best to be a temporary burst of fresh air. For the Garment Exports to really turn the tide and return to the 12% to 15% growth, fundamentals will need to change. Unfortunately, neither the Government nor the Industry seems to be inclined.
The Festive season for the Domestic Industry has started on a weak note, with contradictory reports coming in from different channels and formats. With Puja, Dusshera, and Diwali all being 10 days or so later than the last year, straight comparisons on a YOY basis is difficult, but initial sense tells me my earlier optimism of the market turning around this September-October was wrong. Perhaps, we will need to wait a little longer.
In the meanwhile, the increase in Imports coming in from Bangladesh is continuing unabated, and now the Government is under pressure from Sri Lanka to open up our Markets and sign an FTA on the lines of Bangladesh. Of course, wiser from the errors committed in the FTA with Bangladesh, the Government will ensure adequate provisions in place to ensure no deluge occurs. But I see an inevitable increase in Imports from Sri Lanka in the coming years.
CMAI is fully engaged with the Government in this exercise, and hopefully, a win-win result will follow.
In keeping with the trend in other States, West Bengal is keen to set out a New Garment Policy, and I had the good fortune for a one-on-one Meeting with the Dynamic Finance Minister of West Bengal, Dr. Amit Mitra to present the Industry views. Keep our fingers crossed.