As Indian Rupee falls against US Dollar and cotton prices fall by almost 15 per cent, overseas buyers negotiate hard with Indian exporters and demand supply of garments at pre-covid level prices.
However, the exporters are currently not in the position to reduce the price much.
As cotton prices are expected to fall further, there may be more pressure from the buyers to reduce the price.
On account of rising dollar index and economic worries, rupee weakened to a fresh record low of 79.41 against the US dollar on Monday as investors continue to favour greenback as safe haven bet.
The Indian exporters, who were selling at US $7 this year due to high cotton prices, are being asked to offer products at around US $ 5 –the price at which India sold in pre-covid times.
Narendra Goenka, Chairman, Apparel Export Promotion Council (AEPC) also feels that the recessionary trend in the US and Europe will impact the orders for Spring 2023 that are manufactured and shipped between October and March.
A leading business daily, The Economics Times, quoted him, “We are expecting up to 10 per cent decline of export orders for the Spring 2023, which will impact our second half of current financial year.”
Due to this, there are enough chances that India’s apparel exports of US $19 billion for FY ’23 will be missed. In FY ’22, India’s apparel export was US $16 billion.
Raja M Shanmugham, President, Tirupur Exporters Association (TEA), said “Despite weakening rupee, we cannot give such a huge discount because cotton prices have not come down to the 2019 level. At best, we can offer a price which is 15 per cent lesser than what we are offering now.”
To make up for the expected losses, AEPC is now looking at markets like Japan, Latin America and Australia.
