The strengthening of Dollar and weakening of Rupee and other currenices, have hit Gujarat businessmen hard. The crash in Turkish Lira has totally disrupted the export ofdyes to the middle-eastern country. The strengthening of Dollar has made imports costlier for ship recyclers in Alang. Sectors like pharmaceuticals, foundry and ceramics have also been at the receiving end of the sudden changes in the currency market globally.
The chemical and dye-stuffs sector is the worst hit because of a sudden fall in the value of Turkish Lira. About 45% drop in Lira has reduced the purchasing power of dye-stuffs importers there. Close to 60% of textile dyes produced in Gujarat is exported and Turkey constitutes close to 35% of total exports, informed Yogesh Parikh, president of Gujarat Dye-stuffs Manufacturers Association (GDMA). “Our exports have reduced to about 25% of what it was about over a month ago. We were relying on exports to fuel growth as the domestic market for dye-stuffs is stagnant. However, the export orders are also hit,” said Parikh. He informed that about two months ago dye-makers working at over 70% of production capacity, this has been reduced to about 50% now and if things do not improve, it can further fall to 25% in next two months, he fears.
Turkey also constitutes 5-7% of export of ceramics from Gujarat, KG Kundariya, president of Morbi Ceramics Association said that exports have been hit but the impact is limited. “The effect is for a short time. Orders are renewed after the currency stabilizes,” said Kundariya. The ship recycling industry in Alang is also affected because of strengthening of Dollar. Local businessmen who buy ships for dismantling have to pay in Dollars. Nitin Kanakia, honorary secretary of Ship Recyclers Association of India said that while a significant share of transactions are hedged, a large part is also open to risk of volatility in currencies.
“The strengthening of Rupee has affected all the currencies. The weakening of currencies of former Soviet republics have also affected the trade with India,” said Bhagyesh Soneji, chairperson of Associated Chambers of Commerce and Industry of India (ASSOCHAM) – Gujarat chapter.
Turkey constitutes about 35% of exports of dyes from Gujarat. The rapid decline in the value of Lira has reduced the purchasing power of Turkish importers. Dyes were routed through Turkey to other destinations as well. Our exports have been reduced to about 25% of what it was over a month ago Yogesh Parikh, president, GDMA
We normally hedge currency risks, but we have been caught on the wrong foot because of the sudden depreciation in such a less time. Ship breakers will lose crores of Rupees as buying has become costlier because of strengthening of the Dollar. Nitin Kanakia, hon secretary, Ship Recyclers Association of India, Alang
Strengthening of Dollar has made imported raw materials costlier. The rupee has not depreciated much. Imports will become costlier but not much benefit is expected in exports because of hedging in near future. We can expect some benefits in exports in the next 2-3 months as Rupee has weakened. Amish Panchal, President, Institute of Indian Foundrymen