After contracting during the last three years, the Rs 20,000 crore textile industry at Tirupur, knitwear hub of India, has reported a growth in exports in the first three months of 2013. The industry has attributed the growth to new markets that were explored in the last 10-12 months. Meanwhile, labour and power shortages are going to be major obstacles, say industry representatives.
Exporters from this tiny town, about 450 km from Chennai, said the Free Trade Agreement (FTA), which is expected to be signed with the European Union anytime, will help them compete with Bangladesh, which is now enjoying the duty free benefit.
A Sakthivel, president, Tirupur Exporters Association, said, “We started seeing some sighs of relief from January, from the old and new customers (mainly from the non-traditional markets).”
The industry, which exported garments worth Rs 12,500 crore last year, reported a contraction of around 10-15 per cent in 2009-10 and 2010-11 and 2011-12 it was flat, as Rupee appreciated against the US Dollar. It may be noted, in 2006-07, when the industry clocked around Rs 11,000 crore it had set a target to reach $4 billion by 2012, however it could reach only $2.75 billion.
But the downturn, Rupee appreciation, increase in cost (power, transportation, yarn, logistics, diesel) and Madras High Court’s decision to close down the dyeing units have hit the industry very badly post-2008 and the survival of the industry had become a question.
“Some signs of relief we are seeing now, between January and March, 2013, so far we have seen a 5 per cent growth though margins continue to be under pressure,” said Sakthivel.
Industry representatives have said, the growth was mainly due to contribution from non-traditional markets or new markets which the industry ventured into the last one or two years. These markets including Japan, South Africa, Israel and South America.
The industry has also seen some sort of relief in the US markets along with new orders have started flowing.
“The concern is the European market which used to contribute around 50 per cent to the industry,” said Sakthivel.
With the new order flows and opening of new markets, exports from Tirupur is expected to touch Rs 14,000 crore in 2013-14. While the order inflow comes as good news, exporters are struggling to convert the enquiries into orders.
A leading exporter said, the lack of power and shortage of labour is really hurting the industry. “The power cuts range 7-8 hours during the day and in the night every two hours power goes for one hour.”
He added, power cut affects from all the fronts units are not running, productivity of the workers have come down since he/she don’t sleep properly in the night and inturn it affects the quality.
“Average delay (job orders) in delivery ranges from 10-15 days, to meet customers requirements we have to do airlift, it means additional cost”.
Besides, the recent increase in diesel price is also hitting the industry, said Sakthivel.
“Our FOB value has increased by two per cent because of diesel price increase.”
To boost exports and to meet the competition, Exporters have asked the government for a gold card scheme, which will help them to buy diesel at international price from the designated an oil marketing company.
Besides, the exporters have also asked to allow duty credit scrip at five of garment exports for the export performance in 2012-13, for issuance of duty credit scrip from 2013-14 and onwards.
The scrip will be used for offsetting custom duties on the specialty fabrics of textile chapters.
On the shortage of workers, the association estimated that the industry required around 50,000-75,000 workers immediately to meet the demand. It may be noted, the industry has lost workers after the downfall which resulted units to close down.