Tirupur, (Tamil Nadu), Dec 3: Appreciating Rupee has struck a pall of gloom in this textile town as garment exports started cutting jobs to arrest the declining profit margin.
Already 10,000 workers have lost job and by March 2008 the number will soar to 50,000 if the Centre does not take immediate action, according to Federation of Indian Exporters Organisation (FIEO) Vice President A Shakthivel.
Talking to visiting newsmen from Bangalore here recently, he said ''the situation has turned worse during the last few months after the rupee value against dollar continued to fall due to decline in US economy, and we were left with no option but cut in man power since the margin of profit going down." He said atleast 65 per cent of the workforce of around 300,000, both skilled and unskilled, were from Bihar, Orissa and Uttar Pradesh "Exporters are declining orders from the US," he added.
Consequently this fiscal would see a sharp decline in textile exports and touch Rs 9500 crore as against Rs 11,200 Crore achieved last year he said.
Replying to a question, Mr Shakthivel said that "never had this situation since 1985. We were not mentally not prepared and Bank's also did not guide us properly. When the Rupee value fell to Rs 40, we were under the impression it may be temporary and we can survive, but the real trouble started when it fell to Rs 39 and US importers wanted to pay according the prevailing value." However, Union Finance Minister P Chidambaram's announcement of additional subvention of two per cent in pre-shipment and post shipment credit brought little relief but not to the extent of lifting the drowning ship".
Mr Shakthivel, who is also Tirupur Exporters Association President, said that "I have written a letting to Mr Chidambaram appealing for bailing out the export units by compensating hedging cost or dual exchange rate may be considered and for exporters the value of rupee against dollar should be fixed at Rs 42 for one year and Exporters should be exempted from payment of Service Tax on all services and Fringe Benefit Tax." Replying to a question, he said that most of the export units in Tirupur, which accounts for 65 per cent of the national exports, have decided not to take any order from US customers but concentrate and attract more customers from European and other countries including Japan.
Of the total exports, European market accounted for 50 per cent, followed by USA 35 per cent and others 15. In Tirupur there about 3000 units including 1000 direct exporters all together accounting for 65 per cent to 75 per cent exports from the country.