Indian apparel makers want rupee to stabilize. The rupee has been rising in recent months, in stark contrast to the situation in other countries who compete with India garment exports. While other countries have started taking recourse to depreciating their currencies in the last one-and-a-half years, the rupee has appreciated.

The Chinese yuan depreciated by 13 per cent against the dollar in the last 12 to 18 months, Bangladesh’s taka by six per cent and Vietnam’s dong by seven per cent. The Indian rupee, however, has risen by about six per cent in the last three or five months.

The rupee rose against the dollar even as the dollar rose against most other currencies due to strong flows of foreign institutional investor money into India’s stock markets. Exporters are not able to book orders due to the over-valued rupee as apparel exports are highly price-sensitive.

The rupee was over-valued by 18 per cent in February 2017. Now it is almost 20 per cent. The second factor worrying apparel makers is rising cotton prices. The rising cotton prices and rupee appreciation will nullify the intended impact of the recent export stimulation packages and also weaken India’s position against its competitors.