Indian textile makers seek bailout for forex hedging |
India`s textile industries worth more than 108-billion dollars, which helps international brands to stock their store shelves, is seeking a bailout package on their foreign exchange liabilities after the lockdown prompted cancellation of orders that were to fetch payments in dollars. Losses in forex contracts could run into crores of rupees for the exporters that had used anticipated dollar receivables to enter into contracts with banks. To cover the hedging liabilities the industry is seeking benefits similar to the moratorium extended to borrowers, who now have a three-month grace period on repayments. With export assignments either getting cancelled or delayed, bringing financial troubles for local manufacturers, India`s National Textile Committee has approached the government and the RBI, seeking relief measures. This can further trigger job losses in the sector. Banks cannot be blamed as they will abide by the guidelines laid out for currency covers. They have demanded that the textile exporters should be given some flexibility to manage their dollar delivery in the form of some extensions so they do not have immediate cash flow problems considering the lockdown is no fault of theirs. If the rupee maintains its bearish bias due to dollar shortage and heads another 4-5% south, it could also accelerate problems for them.
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