Apparel Exporters Fail To Gain From Falling Rupee on Poor Demand.

AHMEDABAD: Apparel exporters have failed to turn the rupee's slump into big orders largely because western retailers have cut orders for the 'Spring Summer 2012' season on fears of a slump in demand after the Christmas season.

More than 80% of India's $11-billion apparel business depends on the US and European markets where consumers are currently not spending much on clothes, thanks to the crisis in Europe.

"A falling rupee is good for exports, but poor sentiments are not helping business," said Premal Udani, chairperson of Apparel Export Promotion Council, the official body of apparel exporters. The rupee, the worst performing currency in Asia this year, has dropped more than 16% against the US dollar since July.

On Monday, the currency closed at Rs 52.88/90 to the dollar. A fall in currency normally helps exporters because they can sell more for fewer dollars to make themselves more competitive in international markets. However, Indian exporters are unable to gain because western buyers are buying less. Since October, sourcing is down 15%.

"There is lot of nervousness in the West. People are buying close to the season and retailers are going slow with their orders," said Udani. UK-based textile economist Robin Anson of Textiles Intelligence expects consumers to tighten their belts after the Christmas season. "Even the affluent consumers are feeling the pinch," he said.

US-based market research firm Consumer Edge Insight has indicated that spending inclinations of consumers are at a two-year low. The euro crisis and a looming recession outside Germany too may depress sales at clothing stores in 2012. So, instead of celebrating he fall in rupee value, many small exporters are struggling to survive due to lackluster demand, an AEPC official said.

"Chiffons and georgettes are increasingly replacing cotton, their proportion has gone almost threefold to 40% in last four months," said New Delhi-based export house Dimple Creations MD Praveen Nayyar.

Dimple Creations is working on mass production styles that have less value-addition in terms of embellishments and hence, would be economical to buyers. Frugal consumers are restraining high-fashion buys and opting for garments that cost cheap and many small exporters are unable to cater to the new requirements.

"Only big players with substantial capacities would be able to meet those needs and survive the crisis," said KH Gopal of Alok Industries, which has won several orders for home furnishing to apparel. India's apparel export basket has always been heavily tilted in favour of cotton, but now the presence of man-made fibres like polyester, viscose or lycra is on the rise.

There are more blends in export categories like women's blouses and shirts, men's shirts, scarves, mufflers, mantillas, veils and so on, said Technopak VP, Fashion, Amit Gugnani. Challenging times has made Ahmedabad-based home textiles exporter Pradeep Overseas introduce a new product category. "We have introduced cotton-viscose-cotton fabrics which are 20-45% cheaper than the former," said Kamal Garg, marketing VP of the firm.

Source : economictimes.indiatimes.com