India’s exports fell for the ninth month in a row in July and braving it in the front is the textile sector which is severely impacted by the recession in the US and Europe. In a chat with Sumant Banerji, Rajendra Hinduja, managing director of country's largest exporter of textiles and garments Gokaldas Exports, discusses how bad the situation and how far are we from a revival.
The exports seem to be in a free fall mode. Has the government done enough to arrest the slide?
Absolutely not. I don’t feel enough has been done and textiles and garments which has a sizeable contribution in total exports was ignored in the budget and only partially impacted by the two stimulus packages. The government has increased the allocation of TUFS (technology upgradation fund scheme) but that would be helpful only when there is enough demand for the industry to expand and grow. Currently no company is expanding or setting up factories, so TUFS is a waste.
What are your expectations from the Exim policy?
The minimum the government can do is to increase the duty drawback rates and gives us an additional interest subvention of 2 per cent. This has been a long-standing demand. Both these measures, if implemented, will improve our margins by 4-5 per cent.
Considering that exports are no longer lucrative, is there a change in focus to the domestic market which is said to be better off?
The domestic market is not doing well either and margins are under pressure. So it is wrong to say that a re-alignment of business is all that is required to do.
The government has been exhorting the industry to look at alternate markets. Are we looking at a paradigm shift in which business will be done henceforth?
Yes and no. Diversifying to markets like Japan, Africa or Latin America is a step in the right direction, but these are traditionally so small and there is going to be no immediate relief.
By when do you expect a full scale revival? Are you comfortable with your order book position?
I think it is just a matter of a three to four months. The comeback is going to be slow and peaks will not be reached just like that but the worst will be over. Both in Europe and US, Christmas time business in November is when I expect things to improve. My order book position is comfortable and I am booked for Q3 and Q4.
Lastly, any potholes that are visible in the near future?
The rupee has started to appreciate again and dollar is weakening so that could be a worry.