India’s clothing export capital plagued by Russian-Ukrainian war

Tiruppur Exporters Association (TEA) President Raja A. Shanmugham said the industry, often referred to as the knitwear capital of South India and South Manchester, is facing an acute crisis.

He said the sharp rise in raw cotton prices had already affected the business and now the Russian-Ukrainian war has taken the business to a new low.

Shanmugham, which itself exports to Europe, said the market is slowly recovering from the COVID-19 crisis and they hope the war will be over and raw cotton prices will come down so the industry will return to normal. normal by providing jobs for 6 lakh laborers and earning huge foreign currency for the country.

The industry has a projected revenue of Rs 33,000 crore from export activity and Rs 32,000 crore from the domestic market with a total market capitalization of Rs 65,000 crore.

He said that unless the government supports export units and strictly monitors raw cotton prices, the industry will face the heat even after the end of the war between Ukraine and Russia.

In an interview with IANS, he expressed his concerns as well as his expectations. Excerpts:

Q. Tiruppur’s garment exports are facing the heat of war in Ukraine. Please explain…

A. Yes, we are facing the heat, but the full impact has not yet been felt and we have to deal with it. At present, the already persistent problem of containers has further worsened, creating problems in exporting our goods as there is a huge shortage of containers.

Additionally, all European brands have clothing stores in Russia and Ukraine, now closed due to economic sanctions. Most of the reputable international brands have outsourced their work to Tiruppur which has crippled our industry.

Two things have a direct impact, the lack of containers and the closure of showrooms of major European brands in Russia and Ukraine.

Another issue affecting the market is the increase in fuel costs in Europe due to the war which has disrupted the purchasing power of Europeans. Fuel prices rose 30-40% after the war.

The protracted war has created a fear factor for all, especially in the European region. Everyone prays it doesn’t get any worse.

More than that, buying clothes is relegated to the last option. This will severely affect the trading volume in the coming season.

Q. Is rising cotton prices a reason for rising production costs?

A. Yes, indeed. Rising cotton prices are a major reason for rising production costs. Apart from that, almost all input costs have risen to an all-time high and led to a major rise in production costs.

An increase in production costs and the closure of major markets are the reasons for the fall in business in Tiruppur. You see, the import duty on raw cotton is currently 11% and we want it removed completely. With the import duty, traders find countless excuses to raise the price, which affects our costs.

Farmers are said to have already sold all their cotton to traders and there is a large presence of Multinational Corporations (MNCs) in the cotton trading industry, they raise prices under the cover of this import duty. We want the government to remove that to level the playing field.

Q. When do you expect a resurgence in trading fortunes?

A. Even though every exporter or for that matter every industry expects a revival of fortune at the earliest, one or the other external factors regularly crop up and affect our business. As everyone knows, the market is dominated by external factors and unfortunately we bear the brunt of these factors.

While the COVID-19 pandemic took two precious years away, the sudden development in Europe had a cascading effect on our fortunes.

Be that as it may, we expect an immediate end to these crises and hope that Tiruppur’s export industry will regain its former health and dynamism and provide more and more jobs for workers, earning hard currency to our country and the industry itself will become profitable. Being optimistic, I feel that the worst will pass and the industry will regain its vitality.

Q. As industry is reeling from the war in Ukraine, how is this affecting workers?

A. As you know, this industry is labor intensive and the impact of this war would create uncertainty on the employment front. But as of now, we are all surviving with the commands available despite many challenges. We have a strong workforce and there are around 6 lakh workers who are directly employed in the industry.

We have workers from all over the country and, in fact, it’s a pan-Indian mix. There are about 2.5 lakh laborers from North India in our workforce and we provide them with all facilities including accommodation and decent wages. We believe that the strength of the workers is our strength and we move forward in this way.

Q. How do you intend to overcome the crisis?

A. We have mapped out a survival plan by confirming orders in a not-for-profit situation.

This will lead to our stocked materials being out of stock and will also help buyers as retail markets are all closed. We believe that we have to survive as a team and overcome this situation and with this understanding we are moving forward.

Q. Do you think this would cause other competing countries like Bangladesh and Vietnam to take advantage of the situation?

A. This problem is also for all competitors and we cannot say that a country benefits from this crisis. But our competitors have other advantages like Foreign Trade Agreements (FTAs) through which they are constantly and continuously advancing faster than us.

Q. The COVID-19 pandemic has wreaked havoc across all industries and businesses and after a slow recovery, will the new development make a major dent in your industry?

A. We don’t want that to happen. Tiruppur has already gone through many challenges on its journey forward and as optimists we hope that will also pass soon.

Q. What would be the annual turnover of the garment industry in Tiruppur?

A. We expect a turnover of Rs 33,000 crore from exports in this financial year and another Rs 32,000 crore in the domestic market. Altogether, the total revenue for this financial year that we expect is Rs 65,000 crore.

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Posted: Sunday 03 April 2022, 20:55 IST

Michael O. Stutler