Senior exporters confirming this said some of the fresh contracts being entered into with customers from Europe for the spring/summer 1999 season are against the greenback. The exchange fluctuation witnessed in the case of European currencies during 1997 seems to have made knitwear exporters wary of signing contracts in the respective country's currencies.

S Appuswamy of Sakthi Exports claimed that at least 60 per cent of his export despatch to European countries during end-1998 would be against the dollar. Though exporters of Tirupur have been clamouring for settlement in dollars, most of the buyers from Germany, Netherlands, France and UK were reluctant till last year, said another exporter who prefers shipping his product to the US rather than the European countries. The exports towards Russia (direct orders) and those toeast European countries were mostly in dollars even earlier.

The fall in the European currencies last year had resulted in huge losses to exporters and has partly contributed to lower realisations from knitwear exports. The Netherlands guilder, French franc and German deutsche mark fell by 11 to 14 per cent during 1997. Around 75 per cent of knitwear exports is towards European countries. Though the currencies have since moved up, the exporters feel safe dealing in dollars.

Some of the leading departmental chains in Europe are learnt to have shot down a request by Indian exporters to export against dollars. ``I lost an order but am still safe,'' said an exporter who refused to export against a European currency.

However, one disturbing aspect of the current fall in the Indian rupee is that none of the exporters seem to be too happy. The exporting community which had been seeking a devaluation of the rupee feel that benefits of the fall would not last long.

``This is only a temporary phenomenon. Wehave to ultimately pass on the benefit to the buyer. It will not be too advantageous for us in the long run and imports are going to be expensive,'' said A Sakthivel, chairman of Apparel Export Promotion Council (AEPC) and president of Tirupur Exporters' Association (TEA). He also contradicts the claim that future exports to the European countries would be against the dollar.

``The deals struck now are at Rs 40 a dollar, with a margin of Rs 2 as the reversal could occur any time (of rupee),'' says an exporter to the US. According to him (and some others), there hasn't been any major increase in the prices of products for the last three years. Taking a specific case he adds that a knitwear product which was sold at $4.35 in 1995 is currently being bargained at a marginally higher rate of $4.50 in 1999. ``Our buyers are aware that the input costs have moved up only marginally. Yarn, which forms 60 per cent of the garment cost, is still cheap and is readily available on cash payment. On the labour front wehave a three-year agreement and other increases can be absorbed,'' the exporter said.According to Appuswamy, the last year's poor performance could be offset marginally due to the rupee's depreciation. A young exporter of collared polo shirts contradicts the TEA president's claim that exporters have to pass on the benefit of rupee depreciation to the buyer.

``The buyer never asks when the fluctuation is small. The current fall was much needed as China, Indonesia and Thailand were posing problems with their cheaper products,'' he said.

The modernisation plans of many units, the exporting community of Tirupur claim, would be put on hold due to the fall in the Indian currency. The units in Tirupur of late have been importing machinery to improve the quality of the knitwear.

However, what remains to be seen is how knitwear exports would perform during 1998 as AEPC chairman has set an ambitious target of 20 per cent growth. Exports from Tirupur in 1997 registered only 7.17 per cent growth in terms of valuein rupee, from Rs 2,076.84 crore in 1996 to Rs 2,225.71 crore in 1997, though the growth in terms of quantity was around 17.75 per cent -- from 2,651 lakh pieces in 1996 to 3,122 lakh pieces in 1997.

Exports during first five months of 1998 saw an increase of 11.60 per cent in terms of value and a nine per cent increase in terms of quantity over that in the corresponding period in 1997, though unit value realisation for the month of May nosedived. Tirupur exports for January-May 1998 was Rs 1,087.21 crore (16.22 crore pieces) compared to Rs 973.89 crore (from 14.88 crore pieces) earned in January-May 1997.