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Tirupur, India: Exports Up; But Problems Remain

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Textile exports from Tirupur, India — the nation’s biggest knitwear center — were up significantly in the first quarter of this year, ending a no-growth previous year and a two-year decline.

Driving the increase were sales to old customers and penetrations into new markets over the past year or so. But problems persist in Tirupur, including labor scarcity and reduced energy availability.

In a statement from the Tirupur Exporters Association (TEA), the organization’s president, Dr. A. Sakthivel said, “We started to see some sign of relief from January, from old and new customers.”  Among the new customers, according to Dr. Sakthivel, were non-traditional markets.

Some of the non-traditional markets to which Tirupur knitwear and other textiles were exported were Israel, Japan, South Africa and South America.  Additional new purchases came from the U.S.

The increase in growth from January to March stood at five percent, although margins continued to be squeezed, said Dr. Sakthivel.

When the European Union Free Trade Agreement is eventually signed, Tirupur exporters believe they’ll be better able to compete with Bangladesh, whose exports are duty-free. At one time the European market accounted for about half of all India textile exports, Dr. Sakthivel pointed out.

Among the major problems which continue to nag Tirupur exporters are the periodic power outages which curtail output.

“The power cut ranges from seven to eight hours during the day,” said one of Tirupur’s major exporters. “In the night, every two hours, power goes [out] for one hour.”

Beyond power shortages are delivery delays of up to 15 days, and increased diesel fuel costs.  Exporters have lobbied the government to enact a “gold card” procedure allowing diesel fuel purchases at the world price.

In another initiative, exporters have asked the government to issue them scrip at five percent of the value of garment exports to pay customs duties on specialty fabrics.

Also likely to put a damper on Tirupur’s comeback is a sharp spike in the price of yarn, and a government shutdown textile dyeing facilities because of pollution.

India’s textile industry accounts for about 27 percent of foreign exchange, and is among the world’s largest.

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