Garment exports rises due to currency competitiveness

A study by India Ratings & Research has revealed, India’s

garment exports are growing at a robust pace on the back of good demand in overseas markets leading to a re-rating of the sector. The agency expects the financial metrics of garment manufacturers to improve during 2013-14, which could be one of the key drivers for positive ratings. India Ratings is a part of the Fitch Group.

According to the agency factors like depreciating rupee against dollar, rise in demand from major markets and issues being faced by China and Bangladesh are benefiting Indian apparel and textile exports. Most garment exporters are running on full capacity and are outsourcing manufacturing on a job work basis as orders are growing. Exports grew 13 percent year-on-year in dollar terms to around 6.5 billion dollars (Rs 40,725 crores) in April-September. The growth in rupee terms was even better at 18 percent on a year-on-year basis for the period.

Rupee depreciation has improved the competitiveness of Indian exporters in global textile trade against key competitors such as China, Bangladesh and Vietnam. India's competitiveness has also improved due to the appreciation of the Chinese yuan against the dollar and rising labour costs in China.

Strong revenue growth and earnings in 2013-14 are likely to improve the credit metrics of garment exporters, it added.