The erosion of the net profits margin of textiles & Apparel and Leather & Leather products could have a long lasting impact on employment as these sectors are highly labour intensive.
Moreover, if corrective actions are not taken at the earliest, we might even see credit defaults leading closure of the units. While the data above reveals the average erosion of margins, responses from the smaller players indicate even higher erosion in net profit margins.
The appreciation of Indian Rupee by 11 per cent during the last 12 months has cast concerns on achieving the US $ 160 billion export target set for the current year.
The exporters remain in a disadvantageous position especially in price sensitive international markets where competing Asian countries have experienced either significantly lower rates of appreciation of their respective currencies or their currencies have depreciated during the same period.
For instance, Asian currencies like Chinese Yuan have appreciated by 4.6 per cent and on the other hand Pakistani Rupee and Bangladeshi Taka have depreciated by 1.4 and 0.43 percent respectively making their products more competitive in the international markets against Indian exports.
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Confederation of Indian Industry
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