Exporters Trapped in Forex Hedge

· Buyers Cancel Orders, Domestic Units not able to Pay Wages

Most of the exporters have entered into forward contracts with banks and now they are unable to surrender the committed forex under these contracts due to delay in receiving payments.

As a result, exporters have to face huge losses as they are forced to either cancel or roll over the forward contracts which involves penalty and other charges.

Texprocil has suggested that banks should waive off penalty charges on cancellation and roll over of forward contracts entered into with bankers by the exporters.

The Cotton Textiles Export Promotion Council has urged the government to provide interest-free working capital loan to export-oriented textile companies to tide over the current unprecedented situation due to the pandemic.

Dr KV Srinivasan, Chairman, Cotton Textiles Export Promotion Council, said while overseas buyers are cancelling orders on a large scale, they are not even making payments for shipments already made.

Exporters have closed down their production facilities due to the lockdown announced by the government.

Textile exporting companies are facing severe financial constraints with many finding it difficult to even pay salaries and wages to the workers during the lockdown period as per government directives, he said.

Further, there is uncertainty as to when the situation will be back to normal, he added. Exporters are looking forward to a financial package from the government so that they could sustain.

Seeking sops

Seeking sops for the spinning sector, Texprocil requested inclusion of cotton yarn and fabrics under the MEIS (Merchandise Export Incentive Scheme) and RoSCTL (Rebate of State and Central Taxes and Levies) scheme since the validity of the Foreign Trade Policy has been extended till March 31, 2021.