How the rising Re affects fashion
Sep 03 2013
The reality is that in lot of cases, there is hedging done so that volatility in exchange rates don’t affect the margins. Also in some cases the price is negotiated at short intervals seeing the currency and economic scenario. The Indian apparel industry is already seeing a tough phase: in 2013, we have seen a decline in overseas buyers. Domestic demand of US and Europe was already on decline and with other countries like Bangladesh, where the minimum wages are quite low compared to India, thereby giving them competitive advantage, lives of Indian exporters have become tougher. This is the reason Bangladesh is among those very few countries whose currency has appreciated against the dollar in this past month.
The rupee fall is obviously due to higher imports especially the increase in oil imports, which subsequently increase the inflation, and thereby the cost of labour goes up tremendously. The migration of skilled and unskilled labour in metros is as such on the reverse as staying in any metro is becoming costlier. From housing to vegetables to travelling, prices are increasing as I speak, making lives of workers who earn Rs 9000 to Rs 12000 a month tougher especially if family is included in the deal. The cost of production is bound to get higher, making the end product for retail or exports more expensive. This puts us on the backfoot in the exports race.
The only positive thing to come with this rupee fall will be the increase in the number of NRIs that might plan a visit to India for shopping, especially with the festive and bridal season round the corner. Even e-commerce sites selling designers’ products are expecting an increase in demand. How much of this will really come true, only time can tell.
Since the elections are just a few months away, instability is eminent. Policies tend to be more populist in nature to lure voters. One can imagine the reforms will take its due course to have an effect. I am not an economist to suggest solutions but in simple terms we need encouragement from government to boost production by declaring more SEZs, simplifying the red-tapism and above all have stricter laws on corruption. These measures will encourage existing and prospective exporters to set up units, creating jobs, inflow of foreign currency and generating revenues. I know these look easy on paper, but in practical terms it isn’t. But we have to start somewhere and bring positivity to the business environment.
(The writer is a Delhi-based fashion designer)