Tiruppur: Global clothing buyers return to Tiruppur as prices drop

Orders from global brands like Primark and Walmart have started arriving for garment makers in Tiruppur after three months of continued decline in orders from global markets as their prices have become competitive due to falling cotton and yarn prices.

Exporters said countries like Vietnam, Thailand and Bangladesh offered much lower prices for their garments compared to India, which impacted India’s export orders.

Indian exporters were facing problems with rising cotton and yarn prices in the domestic market and small and medium units exporting garments suffered from a liquidity crunch.

“The export situation has started to improve. Recently, yarn prices in India have come down by 10-15% and this will mainly benefit India, not much to competitor countries. Currency depreciation is also in our favor. So we also hope that some orders from Vietnam and Bangladesh will also come to us. Big global brands like Primark, Walmart and others have started to place orders with us,” said KN Subramanian, Chairman of Tiruppur Exporters Association (TEA).

Tiruppur has 3,000 garment manufacturing units which employ 18 lakh. Tiruppur’s annual exports are between ₹33,000 and ₹35,000 crore.

Indian cotton spot prices fell around 6.21% in October so far to trade at nearly ₹32,508 per bale (170kg) as cotton arrivals picked up. Cotton prices lost higher domestic production estimates for the 2022-23 campaign. “We now expect prices to fall to ₹32,000/₹30,000 per bale in the coming days, while they may fall to ₹25,000 in the medium term,” said Tarun Satsangi, Research Analyst at Origo Commodities.

Cotton demand remains sluggish while lower prices may boost market sentiment as Indian cotton has now become cheaper than Pakistan, which will increase the demand for Indian cotton in the international market. Moreover, Chinese yarns banned by the United States are now finding their way into the Indian market at cheaper rates, Satsangi added.

Cotton prices had increased by 40% in May-June and were at their highest level for 11 years due to a mismatch between supply and demand. Barath Raj, managing director of Tiruppur-based Selvanganpathy Amman Garments, said demand for the clothes has gradually started to come from Germany and Russia, where they are major suppliers. “Demand is up for children’s wear and maternity wear,” he said. TEA Chairman said they have also urged the government to sign the Free Trade Agreement (FTA) with the UK so that Tiruppur’s exports can reach ₹50,000 crore by FY 25.

“Clothing manufacturers have lost markets to countries like Vietnam, which recently ratified its FTA with the EU. It is much cheaper for European companies to place orders with Vietnamese suppliers because they do not have not have to pay duties, while the duties are between 9% and 16% for imports from India,” he added. The overall export of ready-made garments was worth $16 billion in during fiscal year 22.

Michael O. Stutler