After posting a 34 percent increase in exports during 2021-22, India’s largest garment hub Tiruppur is staring at a 30-40 percent fall in export demand during the current financial year. This has been triggered by the economic slowdown in the US and war-effects in Europe. While some units have shut down for short periods, the majority of them reduced total working days from seven to four-five days. They are also working on single shifts. Tiruppur contributed to around 54.2 per cent of the country’s textile exports last financial year.
A decline is expected in exports, despite clocking Rs 15,800 cr during the April-August period, higher than the last financial year. During financial year 2021-22, exports from Tiruppur increased to Rs 33,525 cr from around Rs 25,000 cr in 2020-21.
“Despite higher prices, there was an increase in demand during the first five months. Now, we are seeing a higher decline in orders for the coming months. We expect a 30-40 percent fall in total exports for the year due to the ongoing global scenario,” said Raja M Shanmugam, President of the Tirupur Exporters’ Association (TEA).
The peak period in the region for export orders is expected to start from the current month. According to TEA, the US contributed to around 40 per cent of exports from the region, while for Europe it was 35 percent last year.
“Raw material prices have increased and the war between Russia and Ukraine has seriously affected demand from Europe. And, the US economic slowdown is also causing trouble for advance orders,” said M P Muthurathinam, President, Tiruppur Exporters and Manufacturer Association (TEAMA).
According to manufacturers, the domestic market is also seeing a grim situation due to consumption decline.
“Total purchasing power is less in the Indian market. In addition, hitting our profits, yarn prices also increased from around Rs 220 per kg in 2020 to around Rs 400 per kg now,” Muthuraman added.
Yarn mills, too, are feeling the pinch due to a similar rise in cotton prices, which is yet to stabilise.
“Due to a dip in demand, the textile industry is not taking yarn and our stocks have increased. People are not ready to take the stock. Similarly, higher cotton prices are also a cause for concern,” K Venkatachalam, Chief Advisor, Tamil Nadu Spinning Mills Association (TASMA), said.
From around Rs 1 lakh a candy, cotton prices reduced to around Rs 75,000 now. However, the rates are much higher than the Rs 46,000 a candy during the beginning of 2021.
Though India is the largest cotton-producing country in the world, it stands only sixth in garment exports — behind China, Bangladesh, Vietnam, Cambodia and Sri Lanka.
“The main problem is that the government is not giving priority to micro small and medium enterprises (MSMEs). All the schemes are being lined up for big corporates. Unless our issues are addressed, we will be heading for bigger trouble with global demand down,” Muthuraman said.
