Can Tirupur be Asia's knitting apparel sourcing hub?

24 March 2023, Mumbai 

Tiruppur, roughly 500 kilometers southwest of Chennai, is the country's leading center for knitwear production. The cluster developed independently in a town that was formerly an agricultural community.

Tirupur is a major textile manufacturing hub in India with a sharp focus on knitwear contributing about 60% of total knitwear exports from the country and exports predominantly cotton-based garments.

Is that a possibility; It offers a ready ecosystem of skilled, experienced workforce and evolving supply chain and, has an immense potential to become a leading sourcing hub for knitted apparel in Asia as it is estimated to have in excess of 6,000 factories at any point in time and exports to 100+ countries across the globe and, it is not really a small fish in the pond.

What all you need to know

About Tirupur Exporters Association

Popularly known as TEA – was established in the year 1990. This is an Association exclusively for exporters of cotton knitwear who have production facilities in Tirupur. From the modest beginning, TEA has grown into a strong body of knitwear exporters. The exports from Tirupur have contributed 1% to the total exports worth $ 400 billion from the country, the TEA said in a press release.

The association plans to construct 100,000 houses for its garment workers. As per the association's report published earlier," The knitwear exports from Tirupur have registered 4 Bn USD accounting for roughly one percent to the total exports $ 400 billion-plus achieved earlier from the country”.

Knits capital of India

In the 1970s, the local farmers there began with little textile businesses. In this small Tamil Nadu town, a web of small to mid-sized companies emerged during the ensuing years, with no production, processing, or stitching activity being performed in a single location.

It evolved into a network of businesses that depended on contracting, sourcing, and job working. Currently, Tiruppur exports T-shirts, skirts, sweatshirts, and other knitted clothing made of cotton and cotton blends to the destination countries such as the US, Europe, Australia, and Canada.

As you reach Tiruppur, you are greeted by the smell of chemicals and fabric dyes. Right now, in regions like Tirupur, around 75% of units focus on European markets, and, the focus on the US is less.

Currently, the hub is estimated to be employing approximately 600,000+ workers. Tiruppur has the distinction of directly housing the most number of women entrepreneurs and migrant workers from the north and northeast.

Proliferating

Also, practically every household has at least one member who works in the country's textile and apparel sector. Around 600,000 people are employed in Tiruppur's 10,000 garment manufacturing centers, which produce hosiery, knitwear, casual clothing, and sportswear.

Many estimations underline the hub's significance. 54.2 percent of India's textile exports in FY22 came from Tiruppur. Raja M. Shanmugham, president of the Tiruppur Exporters' Association, claims that Tiruppur alone contributed to 1.07% of India's total FY22 exports, totaling over 480 billion dollars.

Replicate the success

The data explains why the government wants to build 75 textile hubs on the lines of Tiruppur nationwide to make a strong case. According to Shanmugham, the government has to close the gap between the business teams and the decision-makers as a first step toward achieving this objective.

Additionally, he claims that structural adjustments are required to support happening regions, such as Tiruppur for knitwear, Karur for home textiles, Ichalkaranji and Bhilwara for woven fabrics, and Bhadohi and Kashmir for carpets. Moreover, it would allow for quick policy interventions, where rival Bangladesh has outperformed India in agility.

Business case; According to Shanmugham, more excellent representation is required because micro, small, and medium-sized businesses make up most of the industry. "We all have to come forward for the hosiery and garment industry to grow tenfold in size by the next 25 years when we celebrate the Independence centenary of the nation, alluded Rikhab Chand Jain, Former President, FOHMA & Chairman - T.T. Group". “We have a self-groomed labour force, which has many limitations,” the TEA president said, adding that upskilling will lead to a decrease in wastage and an increase in productivity.

Transitory inflation

The interest in Tiruppur comes when cotton and yarn costs have increased, forcing manufacturers to operate at a reduced capacity, leaving wholesale shops with very few customers interested in purchasing clothing.

Industry statistics from a prior Business Standard report show that yarn prices rose/inflationary pressures 112% between June 2021 and June 2022. The cost of cotton per candy, or 356 kg, jumped from Rs 37,000 in June 2020 to Rs 97,500 at the start of June 2022, according to the Tiruppur Exporter's Association (TEA). Hence, the wholesale market in Tiruppur is experiencing a 30% decline in sales.

Current State Of Affairs

"Someone's Loss Is Someone's Gain" With anti-China sentiments on the increase in the United States and worldwide, the region's textile industry sees an opportunity to tap into the American garment market. Furthermore, the importance of shifting away from China's manufacturing sector in the global export value chain is creating opportunities for Indian businesses.

According to one of the earlier Business Standard reports," India/Tirupur is in a sweet spot, primarily because of the China Plus One policy of European and US apparel brands, and the ban on Chinese cotton by the US. Industry players also indicate that following the China Plus One strategy, there is a potential of at least a 20% shift of exports from that country to India".

The Indian Texpreneurs Federation (ITF), located in Coimbatore, had earlier urged textile businesses in the state to focus 'aggressively' on the US market right now given the global geopolitics development.

It is seeking the Centre’s help to upskill workers to match global standards. Its primary goal is to enhance current export turnover to around Rs 1 trillion in another two to three years, adds S Sakthivel, Executive Secretary, TEA.

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