While the US dollar has appreciated significantly against the rupee over the last two months, most exporters in key manufacturing sectors in Gujarat have not gained much from the strengthening dollar, industry experts say.
The rupee has gone from Rs 63 per dollar in March to Rs 67.99 per dollar as on Saturday. While ceramics exporters have seen their realisations go up, sectors such as chemicals, pharmaceuticals, apparel and garments have not seen significant gains in business with the dollar strengthening.
“Chemical units depend on imports for certain raw materials and thus exporters’ revenues will not change significantly,” said Shailesh Patwari, president of the Gujarat Chamber of Commerce and Industry (GCCI). Patwari also owns a chemicalmanufacturing company.
“Raw material costs in the chemical industry have risen significantly, by an estimated 15%. The price of H Acid, a basic raw material for dyes has risen by 30% at least. Coal prices rose by 18% to 20%.
Crude oil prices shooting up, the strengthening dollar and improving demand are other factors that have raised raw material costs, due to which our input costs have risen by at least 15-20%,” Patwari added.
As far as the apparel and garment industry is concerned, exports have been declining overall and the appreciating dollar has not done much good to the industry. “While the dollar as appreciated, raw material costs have climbed, with polyester and cotton in particular rising by 5% to 7%. As input costs rise, there’s no major difference in realisation and thus there’s very little help in boosting exports,” said Bhavin Parikh, a city-based manufacturer.
Pharma industry players also do not see much impact of the strong dollar on their realisations, mainly due to costlier raw materials — particularly active pharmaceutical ingredients (APIs). Prices of APIs have risen by 15% to 20% in eight months. Pharma companies are heavily dependent on China for APIs.
The appreciation of the dollar has provided something of a cushion to pharma exporters, as they have been able to offset high input costs to an extent with improvement in export realisations,” said an industry player.
The ceramics industry, on the other hand, has gained from the strengthening dollar. “With a stronger dollar, realisation on exports will increase by roughly 6%. Going by an estimated monthly export revenue of Rs 1,000 crore, the industry will have increased its revenue by more than Rs 100 crore over the past two months,” said K G Kundariya, president of the Morbi Ceramics Association.