The consistent fall in the rupee against the dollar has aided the textiles sector but the volatility in the exchange rate isn’t allowing the segment to reap the full benefits of the currency’s fall.Experts claim a gradual fall is acceptable to buyers and is absorbed in the international market. But the rupee’s collapse and better realizations of Indian exporters aren’t appreciated by foreign buyers, which are trying to renegotiate contracts. “We have been asked to reduce prices, as our buyers are aware of the sharp fall in the rupee but the problem that would arise later is when the rupee appreciates, it would be difficult to raise prices, as it is a very competitive market,” said Mitesh Shah, VP-finance, Mandhana Industries, a garment exporter.

The textile industry is in a Catch-22 situation — a renegotiation of contracts on the terms of buyers would result in huge losses once the rupee starts to appreciate. Two months ago, garment manufacturers had reduced prices 10-15 per cent. Now, they are being pressed to cut prices further. S P Oswal, Chairman of Vardhman Group, says it might give a rosy picture, as the sliding rupee could fetch higher realizations, but the uncertainty in the market offsets all the gains in the short run.

Rahul Mehta, President, The Clothing Manufacturers’ Association of India, said on the face of it, exporters were likely to gain but much depended on input costs. “If we are able to put input costs under control and ensure the availability of raw material, exporters can earn premium. But the uncertainty looming large in different sectors of the economy is making all sorts of predictions meaningless.”