The Indian textile industry has been impacted by Egypt’s currency crisis, with roughly 100 containers worth about RS 70 crore being returned since Egyptian importers are unable to make payments. Containers of cotton yarn and fabric from Gujarat and South India are coming back. Some exporters have stock at discounted rates and on credit. Industry experts claimed that in addition to the shortage of dollars, a reduction in yarn and fabric prices is also a reason for the situation.
“Egypt is passing through a tough currency crisis and it has decided to allow only exporters to trade in dollars and importers are not given dollars for payments,” said Rahul Shah, co-chairman of the GCCI textile task force. “Additionally, about 100 containers of cotton yarn and fabric got stuck in Egypt for almost a month, and these containers are now coming back.”
Many exporters work with dependable purchasers, and instead of returning the containers, they chose to sell the cargo with a protracted credit period. Further, the situation these days is, the company is able to find a buyer for a product at 30% discounted price, and they have a stock of about 15 containers of products specially made in the Egyptian market, but now the buyers are demanding a 50% discount. Basically, the business has been harmed by large price swings, and sluggish demand in Europe has resulted in low dollar income for many economies that are dominated by the textile industry.