Indian garment exports are not likely to get much boost from the new additional arrangements for international trade in Indian rupees. One reason is that Europe and the US are the major markets for Indian apparel exports and buyers in these markets prefer to pay in dollars. Even, European buyers want to pay in dollars instead of their own currency. However, imports and exports of upstream textile products like cotton and yarn may benefit from the new arrangements put in place by the Reserve Bank of India (RBI) which has asked banks to make arrangement for trade transactions in rupees. Exports and imports of cotton and yarn may get some boost as there are many non-American and non-European countries where importers and exporters may consider transacting in rupees.
The Federation of Indian Exporters Organisation has said that the RBI’s move will pave the way for trading and settlement of export and import transactions in Indian rupees. The RBI has taken this step at a time when many countries in Africa and South America are facing huge forex shortages. So this move is expected to help exporters and importers.
The Southern India Mills Association has welcomed the RBI announcement as a relief to Indian exporters and importers, who have been facing challenges owing to the tightening of monetary policies all over the world.