NEW DELHI, July 15: Textile exports, especially that of cotton yarn, grey fabrics and bed linen, are likely to face stiff competition from Pakistan following the latter's move to devalue its currency, industry sources said.

``The stronger rupee will definitely increase competition between India and Pakistan and the former will be forced to reduce its prices'' Indian Cotton Mills Federation (ICMF) secretary-general MP Gajaria has said.

Until July 11, when Pakistan further devalued its rupee after the dollar firmed up against other currencies, Pakistan had a 10 per cent advantage in terms of the currency value.

``Maybe, the latest devaluation of Pakistan rupee will make that country's products cheaper by 12 per cent in comparison to Indian rupee'' he said.

India primarily faces competition from Pakistan in exports of grey fabrics and bed linen. India is the largest supplier of bed linen to European countries with its shipments worth Rs 480 crore.

``The rupee's firm trend will definitely have an effect in the long run. But right now, it is too early to say anything'', a textile industry source said.

Gajaria said already there had been pressure on Indian textiles exports, especially on cotton yarn, and it was likely to continue now in the face of the devaluation. Already, the unit value realisation of cotton yarn has decreased marginally this year despite the commodity showing a buoyant trend.

Other sources, too, concurred saying the stronger Indian rupee could affect the buoyant yarn exports, which increased by 47 per cent during the first five months of the current annual year in comparison to the previous year exports.

``There will be other problems also going by reports that Pakistan has had a good crop this season. With a carryover stock of one million bales, exporters of yarn up to 30s counts will come under pressure to reduce their prices further,'' the sources said.

``However, this does not mean that we can ask the government to devalue the rupee immediately,'' Gajaria said, adding that the government still would have to take the factor into account.

``But if the exports dip, then the government will have no option than to act accordingly'', he said.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.