The tumbling rupee has brought some hope to beleaguered garment exporters, who are confident of cashing in on the opportunity to win orders. "We have a good chance of getting more business now. If the dollar continues to stay firm, exporters stand to benefit a lot," says R Gopalakrishnan, chairman of the Tirupur-based Royal Classic Group (RCG).
"We can offer competitive rates now. Those doing high volume orders would be able to take advantage of the dollar appreciation," says P Sundar Rajan, managing director of SP Apparels, a large export house near Tirupur.
Especially, exporters working with Wal-Mart, who were facing a squeeze on the pricing front, would benefit from the weakening rupee. The rupee has depreciated by over 20% against the dollar in the last seven months, and by over 6% in 2009 alone. The sliding rupee would offer a 3% to 5% advantage to exporters, industry officials say. That means a lot for exporters, who work on 7% to 8% operating margins. Though the rupee has appreciated against the pound and the euro, majority of the orders are denominated in dollar.
Exporters say they are getting serious enquiries from those placing orders with competitors such as Bangladesh. "We are getting more enquiries. Buyers are asking us to match the prices offered by competitors. With the dollar appreciation we now have scope to offer competitive prices," says a Tirupur based exporter.
While it is not possible to reduce prices beyond a point, even a 5% to 10% difference in prices can result in winning orders, exporters say. Bangladesh-based garment makers quote 10% to 15% lower prices and even if exporters here price their garments 10% lesser they would be able to grab orders as India is seen as a more reliable supply base offering quality products, industry sources say. Competitive pricing would also help in arresting the continuous slump in orders, exporters say.
There has been a 20% to 30% drop in orders in the past three months and the rising dollar has had a positive impact, they say. "If this (strong dollar) continues, we would be able to win 15% more orders and bring down order losses significantly," says an exporter.
