Prime minister Manmohan Singh on Tuesday said the government would address concerns of the beleaguered textile industry that has seen a significant erosion of profitability in the wake of a persistently rising rupee.
“I am aware that the strengthening of the rupee has created some strains for our exporters,” Singh said at the golden jubilee celebrations of the Confederation of Indian Textile Industry (CITI) here.
The government would come forward and address all legitimate concerns of the textile industry as long as “we can work together to generate more employment”, the Prime Minister added. “We have taken steps to help mitigate the loss of competitive advantage while ensuring that our external economic management is stable and sustainable,” he said.
Merchandise exports have come under some pressure due to the appreciation of the rupee and could fall just short of the target of $ 160 billion, although the growth rate was strong at 21.8 per cent during April-December 2007-08. India’s exports stood at $111 billion in April-December 2007.
The rupee has appreciated by 12 per cent in 2007 and is currently trading at less Rs 40 to a dollar leading to exports becoming costlier and less profitable.
The significance of the rupee’s appreciation against the dollar can be seen from the fact that almost 70 per cent of India’s external trade is invoiced in dollars. Labour intensive industries such as textiles, handicrafts and food and agro products have been badly hit in the last 12 months.
The Prime Minister said with the dismantling of the multi-fibre agreement (MFA), there is a new opportunity. “I assure you that our government will be there to help you because I do believe the textile sector has a strategic role in our industrial economy,” he said. Singh called for innovative responses to increase jobs. “The textile industry, which has great potential to generate new jobs, has been suggesting this idea of linking guaranteed employment for a certain number of days in a policy framework that can respond adequately to the sector’s genuine demands,” he said.