A mere indication by Ch­ina’s central bank that it would make yuan rate more flexible, albeit within a narr­ow band, has raised the ho­pes of Indian exporters, es­pe­cially leather and gar­me­nts, for a possible better international trade scenario.

With the dragon giant deriving advantage due to an artificially maintained currency level, Indian exporters remained mute spectators. They could not even take advantage of the 15–18 per cent depreciation of the euro and the pound over the past few months, as the Chinese exporters continued to rule on the pricing front.

“It is just the beginning. Even though China’s central bank has said it will not allow a free fall and will restrict the currency movement within a fixed band, we are happy that there will at least be that much space to move aro­und,” M Rafeeque Ah­med, chairman, Farida Gro­up and former chairman of council for leather exports said.

Yuan has been held at about 6.83 to the dollar since July 2008, drawing criticism that China was maintaining its currency at an artificially lower levels.

“The move could lead to a level playing field in the international market and Indian exporters will benefit. If the proposed move happens, Chinese exporte­rs will have to settle for lesser realisations and may be forced to increase their prices, thereby leading to a better scenario,” Ahmed said.

"The appreciation of the yuan against the dollar will benefit the entire exporter community, especially those into apparel and textile exports. If the yuan appreciates even 5 per cent against the dollar it is a big thing for the Indian exporters,” said Rajendra Hinduja, CEO, Gokaldas Exports.

He said the exporters have been eagerly waiting for the yuan to appreciate for the last six months and he said China's export value stands at $95 billion as against $10 billion of India. So appreciation of yuan will be highly beneficial.

According to A Sakthivel, president, Federation of Indian Export Organisations (FIEO), China has just ma­de an announcement and Indian exporters have to wait and see what steps it takes.

“While Indian exporters are left to the volatility of the rupee, Chinese counterpa­rts enjoy an advantageous po­sition as the yuan is currently pegged to the US dollar. The move to liberalise yuan is good for all exporting countries, especially India. It will help all sectors, inc­lu­ding te­xtiles, leather, garme­nts and handicrafts,” Sakthivel said.

Mohan Srinivas, MD, Orient Express, a leather garment export house, said the benefit would not be much if China allows the “flexibility within certain range. If it is a broad range, it will help Indian exporters,” he added.