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Despite being hit by the Covid-19 pandemic, the knitwear hub of Tiruppur has clocked exports worth Rs 33,525 crore in the 2021-2022 fiscal accounting for 54.2 per cent of the country’s total exports in the sector, an all-time high. 

But the development has not enthused the exporters in Tiruppur as the jump is only on the revenue side due to an increase in the prices of raw materials that had an effect on the final price of the merchandise and not in terms of the quantum of goods. The multi-crore industry had been registering an increase in exports but slumped for a couple of years due to 2016’s demonetization exercise and the introduction of GST in 2017. 

However, the industry showed signs of recovery in 2018 and 2019 until Covid-19 hit the world in 2020 – from Rs 27,280 crore in 2019-20, the export figures fell to Rs 24,750 crore in 2020-21. Despite the slump in numbers, Tiruppur’s share in overall knitwear exports from India has been on the rise – from 42.9 per cent in 2016-17, it has gone up to 54.2 per cent in 2021-22. 

Though a jump of around Rs 10,000 crore -- from Rs 24,750 crore in 2020-21 to Rs 33,525 crore in 2021-22 – in just about a year is significant, exporters say a non-increase in the quantum would spell doom for the industry as it would mean that the knitwear hub is losing out to countries like Vietnam and Bangladesh who have free access to key markets like the EU.  

A leading exporter explained to DH that the revenue increase is directly proportional to the rise in prices of raw materials. “A garment which we sold to the buyer for $2 last year now costs $3. This sums up the rise in terms of revenue,” he said. 

The rise in input costs, especially the ever-increasing prices of cotton and yarn, is hurting the industry as many are forced to incur losses due to sudden hikes in prices – not many buyers accept an increase in the final product after signing the agreement. 

“We would have cheered the Rs 33,525 crore figure if it was a quantum-supported increase. But it is not so. While it is a cheering factor in terms of revenue, it does not make any sense when it is not supported by an increase in quantum. This is a big concern for the industry,” Raja M Shanmugham, President, Tiruppur Exporters’ Association (TEA), told DH.

Shanmugham demanded that the Union Government intervene and regulate cotton prices without which the survival of the industry is difficult. “While we agree that prices will increase, we suffer huge losses due to arbitrary increase of prices. We want a mandatory declaration of cotton stock with all stakeholders to curb the hoarding and speculation by the traders under MCX and NCDEX,” he added.

K G Ganeshan, Partner, Swell Knit, said the international market is “very good” after the Covid-19 pandemic and requires high-quality garments. “We have abundant opportunities but the constant increase in prices is the problem. We want a solution for the problem without which we cannot make real progress in increasing the quantum,” he told DH. 

However, exporters said there is also a silver lining with the domestic sales increase in the past few years with many firms adopting the hypermarket concept which has led to more demand for garments. “From just 8,500 crores before the introduction of GST, the domestic business is now worth over Rs 30,000 crore a year,” Ganeshan added. 

Published On : 06-04-2022

Source : Deccan Herald

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