Exports of textiles and jewellery from India may register negative growth this year thanks to the appreciation of Rupee against the US dollar.

According to Rahul Mehta, president of Clothing Manufacturers Association of India, textiles exports have been hit hard and would fall into negative growth during the second quarter (July-Sepember) of current financial year 2007-08.

"Export growth of textiles during the first quarter of current FY 2007-08 will be hit as most exporters booked their orders in advance," he said.

Total exports of textiles registered at $17 billion during 2006-07.

But traders say for the first time in the textile history, export growth has been halted thanks to the appreciating rupee against dollar.

CMAI has asked the government to start dialogue with the US and the EU governments on bilateral basis to ensure that the exports do not suffer.

"For instance, India has huge import orders of principal products like aero planes and against this, we should get some export preferences," CMAI chairman Premal Udani said.

He pointed out that India's main competitors such as Sri Lanka and Bangladesh are enjoying major tax benefits from the US, Canada and the EU. Sri Lanka is enjoying zero duty benefits from Europe and Bangladesh from US and Canada.

With US government withdrawing special benefits to Indian jewellery imports and rupee appreciating vis-a-vis the dollar, exports of gold jewellery are also expected to go down.

Jewellery exporters said an import tax of 6.5 per cent will be levied on the exports henceforth and this would have a short-term impact as Indian exporters may now concentrate on newer markets such as CIS, Middle East and Japan to avoid over dependency on US.