Rupee gains to lower margins, effect exports: APEC

New Delhi, Apr 17 (UNI) Exuding fears of declining margins and incompetitive exports due to rupee gains, the Apparel Exports Promotion Council (AEPC) today appealed the government to take immediate measures to halt the appreciation of the Indian currency.

The council, an apex agency sponsored by the Ministry of Textiles, has demanded the government to immediately intervene in the functioning of the industry for halting further hardening of the rupee which has taken on a three quarters of gains.

The Indian currency rose to the highest in almost nine years. It rose 1.4 per cent to close at 41.905 against the dollar at the foreign exchange market yesterday.

''Urgent steps are required to be taken by government to curb sharp appreciation of rupee witnessed during last nine months so as to enable global competition and achieve export targets,'' the organisation said in a statement.

The nation's exports, which account for 10 per cent of the 854 billion dollar economy, slowed to less than 10 per cent for the third straight month through February, it pointed out.

The council took exception of this month's 3.6 per cent rise in the rupee as it would erode profit in local currency terms for the industry.

According to the council, competition was getting adversely affected. This was leading to a decline in exports of textile and clothing resulting into a shortfall in achieving export targets for the industry.

With fears that this may also lead to shifting of export orders from India to neighboring countries and have an adverse impact on the employment scenario in the industry, AEPC sounded a cautious warning.

Appreciation of the Indian rupee has started affecting exports in the form of lower unit value realisation. In comparison to the Indian Rupee, the Pakistani Rupee has depreciated by 1.33 per cent during April 2006-2007.

Similarly, the Indonesian Rupaiah has depreciated by 0.36 per cent during the same period. On the other hand, the appreciation of the Bangladeshi Taka has been 1.95 per cent in April 2006-2007.

''The exports of clothing to major destinations like US has slowed down in January 2007. Our concern is quite relevant as the US market accounts for 35 per cent of India's textile and clothing export,'' AEPC Chairman Vijay Agarwal said.

The Ministry of textiles has revised the target of the readymade garment sector as 10,500 million dollars for 2007-2008 against 9500 million dollars for year 2006-07. AEPC is of the view that the apparel industry needs continuous support of the government as stronger rupee vis-a-vis dollar, high interest rate of credit, non-reimbursement of local taxes and levies were making exports less competitive in the international market.

UNI