Tirupur, the largest hub for knitwear exports in India for the first time ever in 2014-15 crossed Rs 20,000 crore but the growth in rupee terms has fallen sharply due to the swift depreciation of the Euro. . A Euro, which was commanding 85 in January 2014, gets only about 66 now is spoiling the export party in Tirupur.

Europe is the largest market for Tirupur's garments which accounts for about 48% of the exports from Tirupur, the US constitutes only 25% of the shipments from the knitwear town. A Euro has depreciated 14% against the rupee so far in 2015.

As a result, Tirupur's exports increased only 15.5% year-on-year (y-o-y) in rupee terms to 20,730 crore in 2014-15. Exports surged 30% y-o-y in rupee terms to 17,817.1 crore in 2013-14, as per the data compiled by the Tirupur Exporters' Association (TEA).

Interestingly, exports increased 15.9% y-o-y in terms of foreign currencies in 2014-15, almost the same growth level recorded in 2013-14.

According to Raja M Shanmugham, managing director (MD), Warsaw International, Tirupur-based garment export house, the sudden fall in the Euro has had a negative impact on exports. It has also affected rupee turnover. Euro depreciation has become a big problem as the realisations have fallen by 10%-12%.

Though dollar billing and taking forward covers as a hedge against volatile currency movements would improve rupee revenues, most exporters don't do it as they consider it to be too complicated, say industry officials. And with the markets also remaining tepid in Europe, exporters are not in a position to hike prices.

According to Premal Udani, MD, Kaytee Corporation, a garment exporter, it is not possible to increase prices as the markets in Europe are still quite dull. Garment exporters typically work on 8%-10% operating profit margins giving them little room to adjust to currency fluctuations or raise rates.

A Sakthivel, president, TEA. Exports from Tirupur have been hovering around the 13,000 crore mark between 2010-11 and 2012-13 due to the demand slowdown in Europe and the US. In fact, exports had declined in 2011-12. They expected Tirupur (knitwear) exports would achieve 21,000 crore (in 2014-15).

Despite the drop in growth due to currency woes, TEA has set target of 36,000 crore with the aim of touching this figure by 2016-17.

The sharp increase in labour costs in key competing countries such as Bangladesh provided the much-needed fillip to garment exporters. With China, the world's largest producer and exporter of textiles, turning its attention towards engineering goods, garment makers in the country have been able to make significant progress in winning orders.