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The industry experts are hopeful that trend will reverse in coming months when purchase orders for summer clothes will start coming from western countries, given that Indian cotton-based wearables are high in demand in foreign countries.
If the rupee depreciates about 10% and the import content in the product being exported is 20%, the net gain to exports would be 8%, said industry experts. "One can also get the benefit while negotiating contracts. If an exporter hasn t hedged, then they would get windfall gains during the period of depreciation, but most of the time, inflation nullifies the benefit given by deprecation," said Ajay Sahai, director general, Federation of Indian Export Organisations.
However, they said sectors with a low dependence on imports would gain while others will lose their benefits to higher oil and commodity prices. "Rupee depreciation needs to be seen in comparison with our competing currencies. Any depreciation of the rupee will benefit labour-intensive exports except gems and jewellery because they have a huge import component," said Ajay Sahai, director general, Federation of Indian Export Organisations (FIEO).
Cotton textile and garment exporters in India anticipate an 8-10% increase in outbound shipments in the coming months due to the holiday season in developed markets being expected to bring relief, even as apparel exports continue to decline. Due to inflation and economic slowdowns, many clients have deferred order placements or requested lower prices, causing the apparel export sector to slump. However, cotton textile exports rose by 6% in July, and a representative from the sector believes that the green shoots emerging.