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Fall in rupee's value slumps hosiery exports in Punjab

December 19, 2011 - Ludhiana

The fall in value of rupee in the international market has dented the hosiery industry in Ludhiana.

Commenting on the sudden rise in the value of dollar, President of hosiery manufacturing association, Ajit Lakra said that most hosiery traders had made forward booking for export orders on past dollar rates. But with the rates climbing steeply the exporters have to bear the brunt of the difference in value and suffer high losses.

Lakra said that the hosiery export industry had incurred losses of over two billion rupees, with the rate of orders falling by almost 50 percent.

"I think most of the hosiery exporters made forward booking, there must be very few who didn't do it. And because of this forward booking the hosiery industry has suffered a loss of rupees two billion in Ludhiana itself," he added.

Lakra further said the orders are now reduced to almost 50 percent.

"We are now in the process of fresh negotiations as they (buyers) want us to reduce the rates. On one side, when the rate of dollar increases the customer does not allow us to take benefit and on the other side, when it decreases we incur losses," Lakra added.

Apart from hosiery, exports in the bicycle industry have also been adversely affected by the fall in the value of rupee.

Former president of United cycle parts and the manufacturing association, D S Chawla informed that compared to 2005, the export of bicycle parts had reduced by 80 percent, falling from 10 billion to 2 billion.

Urging the government to take crucial steps in this matter, Chawla said: "I believe that that government must take some crucial steps in this matter. Our export has dipped considerably. If I talk about the export of 2005, we had exports of rupees 10 billion, but today it has come down to only two billion, making our export to only 20 percent."

"If the fluctuations in dollar continue then export in the bicycle industry will be shut down," he added.

The rupee fell to a fresh low of 54 per dollar.

An 18 percent slide in the value of the rupee since July is adding to a growing worry of economic crisis in the country as stubbornly high inflation ties the hands of the central bank from easing policy to try to turn a grim economic outlook.

The slide in the rupee has caught policymakers flat-footed and by firing up import costs it is undermining the Reserve Bank of India's forecast for inflation to drop to 7 percent by March.


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