THE Coimbatore region, known for its entrepreneurial spirit and which proved its mettle on the global front by exporting quality goods, has come to grief thanks to the continuously appreciating rupee against the US dollar.
As the rupee edges closer to a fresh nine-year high vis-a-vis the dollar, exporters in the region are keeping their fingers crossed over the fallout.
Known for its business vibrancy and billed as the Manchester of South India, Coimbatore is involved in producing and exporting wide range of produce, such as textiles, engineering goods (mainly pumps and motors), tea and jewellery. The combined value of exports is pegged at more than Rs 20,000 crore (including Rs 11,000-crore knitwear exports from Tirupur).
But this year, the rising rupee is likely to take a toll on exports from the region. Textiles, being the prime activity in the area, seem to head for a recession this year owing to higher rupee appreciation and sluggish orders.
Exports slumped by 17% (in value terms) during the first three months of 2007-08 compared to the same period last year. Exports were 36% lower than the expected $7.5 billion target during the same period. The textile ministry is seriously considering revising its export targets.
In Tirupur, the knitwear hub of India, export enquiries have almost come to a standstill. Exporters are struggling to meet the existing orders and are hesitant to place new orders, which, in turn, have the production.
A spokesperson of Tirupur Exporters’ Association said the units here are posting around Rs 2-crore loss per day due to the strengthening of rupee. “The present rupee rate has adversely affected Tirupur exporters. We apprehend the importers will move to China for low prices soon,” sources told ET.