Braving the scorching heat of an April summer, Selvarajan is on his two-wheeler riding through the dusty bylanes of Tirupur, carrying a bundle of fabrics on the pillion of his bike.

His destination is a dyeing unit, to get his job work done. Selvarajan works for one of the micro-entrepreneurs, who have come up the value chain as an exporter from being just a labourer.

Medium and small units account for 95% of the total 1,200 exporting units in Tirupur, known as the `Dollar Town’ for obvious reasons. Business has recovered for most, with exports gaining ground. According to TEA’s provisional estimates, the knitwear exports went up to over Rs 33,000 crore in FY22 while domestic business touched around Rs 30,000 crore.

In FY20 and FY21, Tirupur’s exports were lower at Rs 27,280 crore and Rs 24,750 crore, respectively, owing to pandemic-induced disruptions in overseas markets.

The exports resurgence should be good news for the 22,000 garment factories in Tirupur, which serves as a sourcing base for both domestic and global markets. Yet, the going is tough, courtesy the after-effects of the pandemic and the recent price increase of raw materials.

Tirupur Exporters’ Association (TEA) says that the unprecedented steady increase in prices of cotton yarn – the raw material – in the past 18 months coupled with hike in accessories prices have impacted the MSMEs mainly on the liquidity front.

The cause of concern was that as per the commitment made to the foreign buyers in advance, the MSMEs must compulsorily execute the orders, despite incurring losses or getting a wafer-thin margin.

Raja M Shanmugham, president, TEA, told FE that the industry is now in crisis, which has to be addressed by the government on a war-footing. “To revive MSMEs and get them back to normal functioning, a fresh infusion of liquidity is urgently required and we have asked the Centre to announce a new scheme like ECLGS. MSMEs should be permitted to avail additional credit facility of 10% to 20% of the existing limit,” said Raja M Shanmugham.

The association has asked the Centre to remove the 11% cotton import duty for duty-free import of 4 million bales to stabilise cotton prices and to impose mandatory declaration of cotton stock with all stakeholders to curb hoarding and speculation by the traders under MCX and NCDEX.

The knitwear garment exporting units have to fulfill the committed export orders for the same price of garments, as buyers are not inclined to increase the prices. Moreover, the buyers have the option to source garments from competing countries like Bangladesh, Vietnam, Cambodia and Turkey as they enjoy tariff advantages in the EU market. Also the knitwear exporting units are now facing the placement of lower quantity orders from buyers compared to the corresponding period of last year due to impact of Russia-Ukraine conflict.

Tirupur’s entrepreneurs, who provide employment to 600,000 workers directly, 60% of which are women and a third are migrant workers from north and northeast, however, are hopeful. Tirupur contributes about 60% of total knitwear exports from the country and is exporting only cotton based garments. The exporters’ body believes that there is good scope for increasing the market share in the global space from the current level of about 2.6%, exporting value added and synthetic products.

“Most of the global markets demand synthetic products and we have to meet the buyers demand on this. We are working on product diversification,” say TEA officials.

Sensing that the workers’ attrition was high among the units recently, the association has planned to construct 100,000 housing to them. The garment sector is labour sensitive, and acute shortage of skilled labour is the single major threat to the growth of the textile industry, especially in clusters like Tirupur. One of the important reasons that prevent permanent migration of labourers from their home villages to industrial clusters is the lack of adequate housing and hostel facilities. To overcome this issue, construction of houses with all required amenities with the support of Centre, is being taken up, according to TEA.

The cluster is also in the process of upskilling of its existing workforce. Mostly all the existing labourers are self-groomed without having any formal training which is the biggest lacunae to compete with the global players like China, Korea, Bangladesh and Vietnam. To address this issue, the association is seeking one-time intervention of upskilling the existing workers to match the global standards with the support of Centre.

“We expect our total business to touch Rs 1 trillion in another two to three years,” S Sakthivel, executive secretary, TEA, said. That would be music to the ears of Tirupur’s entrepreneurs and workers.

Published On : 14-04-2022

Source : Financial Express

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